Preamble

The House met at half-past Two o'clock

PRAYERS

[MR. SPEAKER in the Chair]

PRIVATE BUSINESS

HIGHLAND REGION (KINLOCHBERVIE) ORDER CONFIRMATION BILL

Considered; to be read the Third time upon Thursday.

Oral Answers to Questions — EMPLOYMENT

Closed Shop

Mr. Walden: asked the Secretary of State for Employment how many employees are now estimated to be covered by lawful closed shop agreements.

The Parliamentary Under-Secretary of State for Employment (Mr. Peter Bottomley): Only a few thousand out of the 4 million or so employees covered by closed shops have so far been given the chance of voting in a secret ballot. This means that the vast majority of apparent closed shops, including all the large ones, have now lost any protection the law previously gave them and that it is automatically unfair to dismiss any of the employees covered by them on the grounds that they are not union members.

Mr. Walden: Does my hon. Friend share my disappointment at this state of affairs? Is the Department considering what else might be done to encourage people to move in the right direction?

Mr. Bottomley: My hon. Friend and the House will appreciate that if a ballot is not held the effect is the same as if a ballot is held and the right number of people do not vote for the continuation of the closed shop. In effect, the closed shop is lost whether it is not balloted for or whether a ballot is held and an insufficient number vote for it.

Mr. Fatchett: Is not the reality that most employers are happy to disregard the Employment Act 1980? Does the Minister agree that they want sensible industrial relations and the maintenance of closed shops without the interference of the Government and/or legislation? Does he accept that that is the best way to preserve good industrial relations?

Mr. Bottomley: Everyone wants sensible industrial relations. Trade unions have shown that, by opposing the holding of ballots, they are happy not to have closed shops.

Mr. Douglas Hogg: Will my hon. Friend persuade his ministerial colleagues that the time has come to embark

upon a policy of bringing to people's attention the fact that they cannot be dismissed if they choose not to belong to a closed shop?

Mr. Bottomley: Yes, Sir. I have written to hon. Members on both sides of the House giving this information, and I hope that everyone will pass it on to his or her constituents.

Mr. Skinner: Is it not bordering on hypocrisy for the hon. Member for Grantham (Mr. Hogg) to talk about closed shops for trade unionists when he has a moonlighting job as a lawyer at the Temple which supplements his parliamentary salary? The lawyers have the biggest closed shop in Britain. The hon. Gentleman would not be able to make a penny piece in the law courts if he were not a member of a closed shop. Is it not worth noting also that the Government had to tell the coal board when the NACODS agreement was drawn up—

Mr. Speaker: Order. I think that the hon. Member has made his point.

Mr. Bottomley: My hon. Friend the Member for Grantham (Mr. Hogg) and the hon. Member for Bolsover (Mr. Skinner) have both demonstrated that they can speak well for themselves. The closed shop legislation gives the same chance to all union members.

Gainsborough (MSC Funds)

Mr. Leigh: asked the Secretary of State for Employment if he will make a statement about the Manpower Services Commission's funds devoted to the Gainsborough employment area.

The Minister of State, Department of Employment (Mr. Peter Morrison): I regret that precise figures are not available, but the commission estimates that over £500,000 will be spent in 1984–85 on employment programmes in the area served by the Gainsborough jobcentre and about £9 million on training programmes in Lincolnshire as a whole.

Mr. Leigh: As we come to the end of the second year of the youth training scheme, does my hon. Friend agree that the scheme's outstanding success — both locally where a TVEI project is on the rail and nationally where 420,000 young people are covered—gives the lie to the Opposition's claim that we do not care about youth unemployment? We do care, and we act.

Mr. Morrison: I could not agree more with my hon. Friend. I agree that some Opposition Members fail to appreciate the fact that the youth training scheme is extremely popular among the trainees involved and their parents.

Employment Prospects

Mr. Soames: asked the Secretary of State for Employment if he will make a statement on employment prospects for 1985.

The Secretary of State for Employment (Mr. Tom King): The number of people in work has been rising for over a year. The latest reports from both jobcentres and major private agencies indicate a significant improvement over recent years.

Mr. Soames: We are obviously concerned about unemployment. Does my right hon. Friend agree that Britain still has a higher proportion of its working population in employment than either France or Germany?

Mr. King: I am grateful to my hon. Friend for bringing out that point. Obviously, unemployment concerns every hon. Member. We should recognise the truth about employment. According to the latest figures, in Britain 66 per cent. of the population of working age is in employment compared with only 61 per cent. in France and in Germany.

Mr. Wigley: Will the Secretary of State confirm reports in the Sunday newspapers that the Government have set up a new interdepartmental committee, under his chairmanship, to consider the serious impact of unemployment? If so, what are the committee's terms of reference?

Mr. King: If the hon. Gentleman is not supposed to believe what he reads in the newspapers, at least he might do me the courtesy—if he was not able to be here—of refreshing his mind from Hansard about the recent debate on employment, when I made clear the close interest that the Government were taking and will continue to take in measures that will help to alleviate this difficult problem.

Mr. Beaumont-Dark: Does my right hon. Friend agree that employment prospects for 1985 would be much improved if, for example, the Civil Service unions did not ask for a 15 per cent. pay rise and the teachers' unions did not ask for a £25 a week increase and realised that such increases must be paid for from productive industry, which is already under enough pressure?

Mr. King: As I said in connection with last week's unemployment figures, the greatest single contribution that all of us in work can make is to show good sense and moderation in pay bargaining. It is beyond question that good sense in pay bargaining will be the largest single contribution towards alleviating the problems of the unemployed. I certainly endorse my hon. Friend's statement.

Mr. Leighton: As the Government have set out to increase, not to diminish, unemployment, especially long-term unemployment, when will the Department respond by developing programmes that will pay the unemployed rather more than they are receiving in benefit and will encourage them to do something useful for themselves and the country instead of allowing them to rot on the dole?

Mr. King: I believe that the hon. Gentleman, who is Chairman of the Select Committee, has recognised the improvements that we have made, for example, to the community programme. Those improvements are specifically designed to help to alleviate the problems of long-term unemployment. I believe that the hon. Gentleman will welcome the increase in the enterprise allowance scheme, a third of whose members have come from long-term unemployment. The scheme is designed specifically to help those people to start businesses of their own. We are conscious of the fact that this is a worrying matter during the present difficulties.

Mr. Stokes: Is my right hon. Friend aware that employment prospects will become much better in the next few years, when the numbers coming on to the employment register, due to the fall in the birth rate, will be much lower?

Mr. King: It is true that, although we are creating more jobs, we have, as yet, failed to achieve a reduction in unemployment because of the increased numbers coming into the working population. As my hon. Friend said, those numbers should be a declining feature because of the change in the demographic base. By the end of this decade it may work in the opposite direction.

Mr. Bell: Does the Secretary of State accept that his words will give cold comfort to those who live in Corringham Walk, Netherfields, Middlesbrough, where 91 per cent. of the heads of households are out of work? That means that of 500 heads of households who are fit and available for work, only 45 are working. What message does the Secretary of State have for those brave, valiant and unfortunate people who are suffering from the consequences of the Government's economic actions?

Mr. King: With the interest that he shows, I should have thought that the hon. Gentleman would know that I have made it abundantly clear that the Government recognise the difficulties of which the north-east and the extreme south-west are the worst examples. In answer to the hon. Member for Caernarfon (Mr. Wigley) I referred to the work that we have done, the consideration that we have given, the improvements that we have already made and the work which is continuing to see how the Government, with the general improvement in the economy, can ensure that we get more jobs. Anything that the hon. Gentleman can do to encourage moderation will help the plight of those people.

Mr. Penhaligon: Will the Secretary of State tell the House what he believes to be the greatest threat to employment prospects in 1985 — a small increase in inflation, or a substantial increase in interest rates?

Mr. King: I do not want to make that choice. In view of the problems that we face at present, the Government have given a clear signal of the importance that they attach to keeping on top of inflation. The benefits are shown clearly by the improvement in job prospects. That gain must not be thrown away — it must be built upon. By controlling inflation, I hope that we can achieve a sensible reduction in interest rates.

Mr. Heathcoat-Amory: Is my right hon. Friend not worried that a high proportion of the new jobs being created go to married women, often working part-time? Does he agree that some features of our tax and national insurance system encourage that? Will he undertake to consider reforms which aim at having one breadwinner in every family rather than two in some families?

Mr. King: Serving, as I do, in the Government, I do not want to enter into that argument, but I recognise that there are some anomalies and problems in the present structure which tilt the balance unsatisfactorily. I confirm that there are matters that we are considering in that respect.

Mr. Prescott: The Secretary of State often lectures others about what they can do to reduce unemployment. As a member of a Government who have thrown many thousands out of work in the Civil Service, particularly in his own Department, is he aware that the proposal that he has before him about the Manpower Services Commission's skillcentres, which involves 1,000 redundancies in 1985, has led to pressure in a letter from the MSC to those employees threatening that if, using their


constitutional rights, they protest to Parliament about redundancies in 1985, it will use the Industrial Relations Act 1971 to intimidate them?

Mr. King: I hope that the whole House will support proposals which are directed towards the maximisation of training and the most efficient use of resources. The Government are committed to using resources as effectively as possible to ensure that training is brought to people. If in the process there must be some reorganisation—the hon. Gentleman knows the decision that is before me for consideration at present — I have made clear to the Select Committee the criteria by which I shall judge it.

Several Hon. Members: rose—

Mr. Speaker: Order. There is another question on that matter.

Basildon

Mr. Amess: asked the Secretary of State for Employment how many people are employed in high technology industries in Basildon, by industry; and if he will make a statement.

The Parliamentary Under-Secretary of State for Employment (Mr. Alan Clark): It is not possible to give a precise figure for the number of people currently employed in this type of industry. The latest available figures from the 1981 census of employment showed that nearly 5,000 people were employed in Basildon in industries associated with technical innovation.

Mr. Amess: Is my hon. Friend aware that there are many high-tech industries in Basildon, including Rayridge, which is one of the few British robotic companies? Does he agree that Basildon is an excellent place for such job opportunities because of its fine housing and excellent air, sea, road and rail communications?

Mr. Clark: Yes, Sir. My hon. Friend's claims for his constituency are borne out by the news of industrial development in the area. I am aware that £9 million is being invested in a new data processing centre and that GEC Avionics is moving into the old Rothman's factory, about whose closure so many hon. Members agitated last year.

Voluntary Projects Programme

Mr. Freeman: asked the Secretary of State for Employment if he will make a statement on the operation to date of the voluntary projects programme.

Mr. Peter Bottomley: I have been very encouraged by the achievements of the voluntary projects programme, which, in the course of this year, will be providing some 55,000 unemployed people with the opportunity of constructive activity. The Government announced in November that the programme was to be extended for a further three years.

Mr. Freeman: Is my hon. Friend aware that this popular and important programme helps two projects in my constituency, one of which, Furniture Turnaround, certainly helps the poor and the unemployed? Will my right hon. Friend the Secretary of State argue with the Treasury for funding all such future programmes on a longer term albeit declining, basis, so that the voluntary societies can make plans with greater certainty?

Mr. Bottomley: My hon. Friend's encouragement and support are most welcome. However, if initial funding is given, with the possibility of extension, it is possible to see whether the projects are worth supporting in the future. Many projects are in their second or third year of funding.

Mr. Meadowcroft: Is the Minister aware that his hon. Friend the Minister of State was generous enough to visit my constituency to view the CATS project in Bramley? Is the hon. Gentleman prepared to step outside the narrow limitations on the number of VPP places available in any one city, in order to assist an especially large project, such as that one, which is in need of help?

Mr. Bottomley: We are always interested in views that are put forward. The extension of the programme for three years gives greater support than there would have otherwise have been. The hon. Gentleman's comments will be noted.

Young Persons

Mr. Yeo: asked the Secretary of State for Employment how many young people under 21 years of age have been unemployed for more than one year.

Mr. Alan Clark: On 10 January 1985 the number of claimants in the United Kingdom under 20 years of age who had been unemployed for over one year was 121,000. The available analysis by age does not separate those under 21.

Mr. Yeo: As it is the lower paid jobs that offer that particularly tragic group of youngsters their best hope of employment, will my hon. Friend use his considerable influence within the Government to try to achieve an increase in the lower earnings limit for national insurance contributions from £34 to £100 per week?

Mr. Clark: My hon. Friend's central point is right. Young people must not be priced out of jobs. That is why we have a young workers' scheme, and we regret it when the wages councils frustrate that objective. My right hon. Friend the Secretary of State for Social Services is at present engaged in a review of social services costs and charges. I shall draw my hon. Friend's views to his attention.

Mr. Boyes: In Tyne and Wear, 500 people under the age of 18 have been unemployed for over a year. Has the Minister had time to read page 106 of the latest issue of "Social Trends", according to which there is a direct relationship between high unemployment and long-term illness? Are not the Government, who are guilty of creating long-term unemployment, also guilty of creating long-term illness?

Mr. Clark: The hon. Gentleman is right to draw attention to those young people who have been unemployed for over a year. That category causes us great concern. We have spent £2 billion on special employment and training measures. The level of resources and the way in which they are applied are subject to continuous review and discussion. The group to which he refers is at present under consideration.

Mr. Rowe: In view of the considerable success of the enterprise allowance scheme, will my hon. Friend look again at the extreme partition between those who receive benefit of some kind and those who receive a wage? There should be room for overlap.

Mr. Clark: That is a matter for my right hon. Friend the Secretary of State for Social Services. There have already been changes affecting the community programme, and I welcome them.

Mr. Flannery: Is it not a fact that scores of thousands of young people who have left school have never known what it is to work? When will the Government realise that that terrible crisis is an act not of God but of their monetarist policies, which it is time they brought to a close because they are uneconomic and loss-making?

Mr. Clark: The hon. Gentleman is not entirely right. Certainly there was a category of young person, as his hon. Friend the Member for Houghton and Washington (Mr. Boyes) mentioned, prior to the introduction of the youth training scheme, who could not get a job and had been unemployed for more than a year. Since the introduction of the YTS, there is no reason why any youngster should leave school without the possibility of obtaining a place on the youth training scheme.

Job Creation and Protection

Mr. Teddy Taylor: asked the Secretary of State for Employment how many persons are now being employed on the various job creation and protection measures covered by the Manpower Services Commission.

Mr. Peter Morrison: At the end of December, 662,000 people were being helped by our employment and training measures. Of these, 478,000 were on schemes administered by the Manpower Services Commission.

Mr. Taylor: Are not those dramatic figures an answer to those who say that the Government are doing nothing about unemployment? Nevertheless, has my hon. Friend found an answer to the problem of JEGS Electrical of Southend, which would like to add to those figures, but has been told by the Department that it cannot get a grant if it pays young workers more than £40 a week, and by the wages council that it will be sent to prison if it does not pay them £40·05? Can he find a solution to the problem and make those figures even more dramatic?

Mr. Morrison: I am grateful to my hon. Friend for what he said about the schemes run by the Manpower Services Commission. Contrary to what the Opposition say, those schemes are extremely popular. My hon. Friend will have heard the reply of my hon. Friend the Under-Secretary about wages councils in that regard.

Mr. Campbell-Savours: Is the Minister aware that many of the young people in west Cumberland who are in trouble with the police, on whatever charge, whether poaching or vandalism, are in trouble only because they do not have, but want, work? In so far as the community programme gives them the opportunity to work, particularly that age group, will the Minister ensure that when the Budget is announced every representation will have been made to the Chancellor of the Exchequer to ensure an expansion of that programme because we desperately need those places in west Cumberland?

Mr. Morrison: I am aware that in Cumbria all 16-year-olds and, in effect, all 17-year-olds, have the opportunity of a place on a youth training scheme. I am also aware that the hon. Gentleman has worked hard on and been of great support to the community programme. I listened carefully to what he had to say about it.

Labour Statistics

Mr. Dormand: asked the Secretary of State for Employment what is the total number of unemployed and the number of long-term unemployed, respectively.

Mr. Parry: asked the Secretary of State for Employment if he will make a statement on the latest unemployment figures.

Mr. Pike: asked the Secretary of State for Employment how many people are currently unemployed in Great Britain; and what percentage that is of the work force.

Mr. Tom King: On 10 January the number of unemployed claimants in Great Britain was 3,218,000, and in the United Kingdom it was 3,341,000, representing a rate of 13·7 per cent.
Of those, 1,316,000 had been unemployed for more than 12 months.

Mr. Dormand: Is the Minister aware that those figures, particularly those for the long-term unemployed, demonstrate more clearly than anything the sheer incompetence and insensitivity of the Government? Is he further aware that within those figures is the fact that in the northern region 243,492 people are out of work, which is 19·1 per cent., and the highest figure for any region outside Northern Ireland? Is he also aware that those figures have increased every month in the five years since the Government came to power? Did the Minister see the letter in The Times yesterday from the chairman of the northern region Confederation of British Industry, the chairmen of the chambers of trade and other employers' associations about the need for a radical change of policy? If his cronies are suggesting that, what on earth is the Minister going to do about it?

Mr. King: I am disappointed in the hon. Gentleman's contribution. He knows perfectly well that slogans on such a serious subject do not help. I do not stand here and criticise the Socialist Governments in France, Spain or Italy of insensitivity because in those countries unemployment during the past year rose significantly faster than it did here. I hope the hon. Gentleman will recognise that the best hope for this country is to create more jobs. I hope also that he will welcome the fact that during the past year, after the great loss of jobs that we suffered from the lack of competitiveness in British industry, we have started again to create more jobs.

Mr. Parry: The Secretary of State should hang his head in shame at such abysmal figures. In addition to almost 3·5 million people unemployed, 679,000 people are on Government-funded schemes, and a further 500,000 people do not register, making the true figure 4·5 million unemployed. That is the highest figure of any major industrialised nation. Why does not the Secretary of State, who is pathetic, do us all a favour by offering his resignation and packing up?

Mr. King: I address exactly the same comment to the hon. Gentleman as I did to the hon. Member for Easington (Mr. Dormand). It is no good making such political comments about this serious problem. He chose to advance the size of our programme as a criticism of the Government. I take pride in the fact that, for the first time, a Government have provided a proper training and work preparation scheme for our young people. I take pride in


the fact that we have increased to more than £2 billion our investment in training and special measures. I do not take that as a criticism.

Mr. Pike: Does the Secretary of State accept that, to millions of people, the present level of unemployment is unacceptable, as was the Prime Minister's comment last week that the figure was "disappointing". That was an extremely poor word to use, even in parliamentary terms, for a figure that is completely unacceptable. When will the right hon. Gentleman persuade his colleagues in the Government to stop playing around with the problem of unemployment and to start spending money in the public sector and on infrastructure to create jobs, because that is the only way to reduce the present unacceptable total?

Mr. King: The present level is not unacceptable to some people in the House—it is unacceptable to every hon. Member of the House. The House owes it to the country to address responsibly the question of what is the most effective way to reduce unemployment. The hon. Gentleman peddles again the belief that a wand can be waved to reduce unemployment. He should ask the right hon. Member for Blaenau Gwent (Mr. Foot) why he did not wave that wand when he was Secretary of State for Employment and when unemployment doubled.

Mr. Kenneth Carlisle: Does my right hon. Friend accept that people made redundant in traditional industries have special problems in finding new work? In this respect, will he recognise the work done by the information technology centres in training for new technologies, and extend that training to older people made redundant from traditional industries?

Mr. King: I am grateful to my hon. Friend. He will have noticed that the central thrust of the new proposals in "Training for Jobs" is that more public expenditure will go towards training the unemployed, including the long-term unemployed, to helping the information technology centres, and to putting training into the community programmes to help the unemployed back into work. That is a key element in our programme.

Mr. Madel: As it is important to get many more youngsters off the dole queues and into training courses, why do not the Government abolish the 21 and 15-hour rules as they affect benefits, which would not only give youngsters a better opportunity but would help industry to overcome some skill shortages?

Mr. King: I note what my hon. Friend says. He will be aware, as several hon. Members have said, that there are undoubtedly problems in helping the maximum number of youngsters into work. Not the least of those problems is the fact that, in many industries, the starting rate for a 16-year-old is 50 per cent. of the adult rate, whereas in many industries in Germany it is 25 per cent. of the adult rate. It is interesting to compare the relative levels of youth unemployment in Germany and in Britain.

Mr. Hickmet: Bearing in mind that, as a direct consequence of the miners' strike, the British Steel Corporation is paying £3·5 million a week to move illegally blacked coal and ore and that, consequently, it has had to cut capital investment and its maintenance programme, as has the National Coal Board, may I ask my right hon. Friend to advise the House what effect he

believes that had on unemployment during 1984, and what effect he expects a solution of the strike to have for the unemployed in 1985?

Mr. King: It is extremely difficult to get a precise figure as to what the impact will be. It is something that I would like to see, because there is no doubt that the miners' strike and the length of time that it has lasted has been very damaging to employment prospects in the country. In 1983 we had the highest growth rate of any country in Europe. The miners' strike has been a setback to that growth rate. Even so, we achieved an average rate of growth in 1984, and the forecast of the OECD is that we should look forward again to the highest rate of growth of any country in Europe. That will provide the best possible prospect of jobs if this unnecessary and costly strike is settled.

Mr. McGuire: Is not the greatest indictment of the Government that the figure we have been given, whether the real figure of 4·5 million or the massaged figure of approximately 3·5 million, is being added to at the rate of a net loss of 20,000 jobs every month? On the Government's own estimates the figure will rise to over 250,000 to be added to the total already given. Is that not the greatest indictment of the Government? When the Government came to power they promised that they would release an entrepreneurial flair which would reduce the 1·25 million unemployed, a matter they boasted about in a huge slogan "Labour isn't working". If it was not working with 1·25 million, it is not working now.

Mr. King: I am sorry that the hon. Gentleman did not listen to the earlier answer. He is quite wrong. There is not a net loss of jobs, there is now, at last, an increase in the number of jobs. There is also an increase in the working population and that is why we have to see that increase in jobs further enhanced.

Mr. Wrigglesworth: Do not the figures which the Secretary of State announced today prove that the Government's policies over the past five years have utterly failed to help make British industry more competitive? Does not the fact that the public expenditure figures, which have recently been produced, show that there will be unemployment for 3 million-plus for the next few years demonstrate what a scandal it is that the Government still claim that they have the right policies to reduce the unemployment figures?

Mr. King: I do not agree with the assertion of the hon. Gentleman. I would expect the hon. Gentleman to have recognised, after a period of undoubtedly serious shake-out in industry in which the overmanning which should have been tackled many years ago but which was allowed to fester was tackled — the inevitable consequence of which was some increase in unemployment—that at last we have moved into a situation in which we are creating more jobs. The result of the policy of reducing inflation has been to make Britain more competitive and to make that possible. What we now want to do is to reinforce that advance.

Mrs. Jill Knight: Will my right hon. Friend consider, as he rightly and regularly publishes unemployment figures, publishing the figures for job vacancies also? To some people it is strange that, in many areas where


unemployment is worryingly high, the local papers each night carry 15, 16 or 17 pages of small ads placed by employers wanting people to fill jobs.

Mr. King: It is certainly true, if one looks at the flow of vacancies through jobcentres and at the forecasts of Manpower and other private employment agencies, that they forecast the best prospects for new jobs for five years. With the high flow of vacancies through jobcentres, there is clear evidence of a significant improvement, not only in the south-east, to which obviously much of the improvement is directed, but in other parts of the country.

Mr. Foot: When the right hon. Gentleman dares to compare the record of his Government with that of their predecessors, will he recall that in the last months of that Labour Government the unemployment figures were coming down each month? If his Government could achieve any comparable figures, he would say that it was the biggest miracle since the loaves and the fishes. Will he also apply his mind to the fact that he should stop the closure of skillcentres, as the whole country is crying out for more skills?

Mr. King: What I do recall is the part played by the right hon. Gentleman and some of his right hon. Friends in deliberately obstructing the restructuring of major parts of British industry and the nationalised industries at a time when they faced a serious loss of competitiveness, condemning many people to much more serious unemployment. The steel industry is the most obvious illustration of that. I recall the contribution which the right hon. Gentleman and his hon. Friends made to Britain's ill-prepared state when the recession struck. I think the history books will recognise that a precious opportunity was lost through the incompetence of the Labour Government at that time.

Lord James Douglas-Hamilton: Will my right hon. Friend bear in mind that there are now more potential sponsors under the community programme than approved projects in the Edinburgh area? Will he keep that thought in mind as there seems to be substantial scope for expanding that programme in future?

Mr. King: I note what my hon. Friend says. Contrary to the unhelpful comments by some Opposition Members, the success of the youth training scheme and of the community programme has been achieved through the willingness of employers, other organisations and the trainees themselves to work together to make a success of those programmes. There has been a real national effort to make a success of both programmes, and I pay tribute to that.

Mr. Evans: Will the Secretary of State acknowledge that if the 660,000 people on the Government's special employment schemes are added to the number of unemployed claimants that the right hon. Gentleman has just announced, as well as the 400,000 people who were fiddled out of the unemployment statistics in 1982 and 1983, that makes a total of nearly 4·5 million people who are without real jobs and that that figure is more than three times the figure when Labour left office? Will the right hon. Gentleman also acknowledge that there are now more long-term unemployed people than the total number of unemployed in Great Britain when Labour left office? Is not that the real picture of the inhuman misery that the Government have unleashed upon this country?

Mr. King: That is the most disgraceful supplementary question that we have had during this Question Time. The Labour party tried to launch a scheme on the same principle as the youth training scheme, but could not get the support of the Labour Government. The youth training scheme has been launched and carried through with the support of employers, trade unions and the trainees themselves. The hon. Gentleman's supplementary question is an insult to many trade unionists who have worked hard to make a success of the YTS. I take pride in the increased resources. I do not think that it is disgraceful that we have increased resources to help make a success of the scheme.

Race Relations Act 1976

Mr. Proctor: asked the Secretary of State for Employment whether he is now in a position to announce the date when he will introduce legislation to amend the Race Relations Act 1976 in respect of the code of practice for the elimination of racial discrimination and the promotion of equality of opportunity in employment, published by the Commission for Racial Equality; and if he will make a statement.

Mr. Alan Clark: It is our firm intention, as soon as the parliamentary timetable permits, to amend section 47 of the Race Relations Act 1976 to enable my right hon. Friend to amend codes of practice before their presentation to Parliament for approval.

Mr. Proctor: Is my hon. Friend aware that when our right hon. Friend the Secretary of State for Trade and Industry was Secretary of State for Employment he pledged, shortly before the general election, that amending legislation would be introduced? When will the pledge be redeemed?

Mr. Clark: My right hon. Friend the Secretary of State is well aware of that pledge and the importance that many of his hon. Friends attach to it. He is particularly aware of the concern that has been expressed by the Select Committee on Employment. As my hon. Friend knows, the CRE will put forward revisions to the code, following a review, within three years, and plainly it is desirable that amending powers should be available by then.

Ms. Clare Short: Will the Minister comment on the leak from his Department, which suggests that the Government are considering exempting businesses in general, and small businesses in particular, from the operation of the Race Relations Act? How does requiring businesses not to treat black people unjustly impose financial obligations on them? Does the real explanation lie in a further leak that has come from his Department, which suggests that in a departmental meeting he referred to the black citizens of Britain as people from Bongo-Bongo land? Does not that remark make him unfit to hold the responsible office that he does?

Mr. Clark: I am delighted to congratulate the hon. Lady on her elevation to the Front Bench, and I look forward to many adversarial confrontations with her. As to her allegation of what is being planned in my Department, I have no knowledge of this.

Skillcentres

Dr. McDonald: asked the Secretary of State for Employment what consultations he has had with the Manpower Services Commission about the future of skillcentres.

Mr. Peter Morrison: The chairman wrote to my right hon. Friend on 24 January with a full report of the commission's views.

Dr. McDonald: In view of the grave disquiet over the plans to close 29 skillcentres and over growing skill shortages, and as fears have been expressed that this will lead to a decline in the skillcentre training agency, will the Minister urgently arrange for a debate on the matter in the House? Will he further arrange for a stop to be put to the disgraceful plans of the Manpower Services Commission?

Mr. Morrison: I am sure that my right hon. Friend the Leader of the House has heard what the hon. Lady has said about a debate. She will no doubt agree that money voted by the House should go on training rather than on bricks and mortar and on supervisors who do not have anybody to train.

Oral Answers to Questions — PRIME MINISTER

Engagements

Mr. Roger King: asked the Prime Minister if she will list her official engagements for Tuesday 5 February.

The Prime Minister (Mrs. Margaret Thatcher): This morning I had meetings with ministerial colleagues and others. In addition to my duties in the House I shall be having further meetings later today.

Mr. King: As, so far today, another 600 mineworkers have gone back to work, and as the overwhelming view of the House last night was that a negotiated settlement on the basis of uneconomic pit closures had to be reached, can my right hon. Friend confirm that the NACODS agreement is still there for the National Union of Mineworkers to pick up? If the NUM has trouble arriving at an agenda agreeable to it in which the closure of uneconomic pits is item No. 1, can my right hon. Friend use her good offices to make it item No. 2, with "apologies" as item No. 1?

The Prime Minister: I confirm what was said last night. As I have frequently said to the Leader of the Opposition, the strike would be over if the NUM accepted the NACODS agreement and the NACODS approach. I believe that the National Coal Board was right to make the fundamental issue of this strike—the closure of pits on uneconomic grounds—item No. 1 in the agenda. If the NUM would agree to the wording for item No. 1 sent to it by the NCB, negotiations could start.

Mr. Steel: Will the Prime Minister find time today to send a message of congratulations, on behalf of the whole House, to the Archbishop of Canterbury on the success of his envoy through the patient diplomacy in Libya?

The Prime Minister: I gladly join the right hon. Gentleman, the Leader of the Liberal party. The Libyan decision to release the four hostages into Mr. Waite's custody is a welcome development. We are deeply grateful to His Grace the Archbishop of Canterbury and to Mr.

Waite for the patience and skill that they have shown in the past few months. We now look to the Libyan authorities to complete quickly the formalities for the early return of the four people to their families in Britain.

Mr. Chris Smith: Does the Prime Minister recall that last Thursday she told me on the Floor of the House that she had never predicted that unemployment would start to fall? Does she also recall that in November 1983 she said on the Floor of the House that she hoped to see a "reduction" in unemployment in the coming months? Does she also recall that in December 1983, she said: "Unemployment … appears to have peaked"?—[Official Report, 8 December 1983; Vol. 50, c. 461.] Will she now be more honest with the House and tell us that unemployment is remorselessly rising? Will she show any remorse for the part that her Government's policies have played in that?

The Prime Minister: The hon. Gentleman has struggled to find quotations and has been wholly unable to find one that predicted the state of unemployment and gave figures either for the end of a year or for the future. The hon. Gentleman astonishes me. Yes, I do hope that unemployment will fall. I hope that the hon. Gentleman hopes so too.

Mr. Neale: asked the Prime Minister if she will list her official engagements for Tuesday 5 February.

The Prime Minister: I refer my hon. Friend to the reply that I gave some moments ago.

Mr. Neale: Has my right hon. Friend noted that retail spending in December was the highest on record in terms of both value and volume? Does she agree that one of the best ways to create more home-based jobs would be to meet that increased demand with home-produced products and services which are both enterprising and competitive, rather than to surrender a substantial part of that demand to our overseas competitors?

The Prime Minister: Yes, retail sales were very high indeed. It shows that there is no shortage of overall demand. I hope that more and more people will buy British goods because they are the best and I hope that more and more manufacturers will realise that the components that they buy can be manufactured just as well in Britain and upon as competitive a basis.

Mr. Kinnock: After another year in which industrial production was down, the pound was down and the trade balance was down, while manufactured imports were up by 10 per cent., interest rates were up by 15 per cent. and the unemployment rate was up by 150,000, was the Chancellor of the Exchequer correctly conveying the Prime Minister's view when he said last night that the Government's strategy "has achieved what it set out to achieve"?

The Prime Minister: The Government's strategy has achieved the lowest inflation for 15 or 16 years, which is absolutely vital, the highest output, which is absolutely vital, and record investment. On top of all that we have honoured our pledges to the pensioners and have achieved a 20 per cent. real increase in the National Health Service. That is far better than the record of the right hon. Gentleman's party.

Mr. Kinnock: We are used to hearing the Prime Minister's tales of recovery.


To be told that we are in the fourth year of recovery with unemployment at 3½ million is a definition of an economic boom unknown to me.
Those are the words of the Conservative Member of Parliament for Bury, North (Mr. Burt) in the current edition of Reformer, the journal of the Tory Reform Group. Its president is the right hon. Member for Worcester (Mr. Walker). Does the Prime Minister not realise that businesses and managers all over the country take the same view of affairs as her hon. Friend and that her policies and strategies are not an achievement but an act of economic sabotage on a grand scale?

The Prime Minister: If the right hon. Gentleman thinks that, he must apply exactly the same strictures to the German economy, which announced today record unemployment of something like 10·4 per cent. Germany also has conscription. It has also sent home a number of its gastarbeiter. What the right hon. Gentleman is refusing to do is to recognise that we are in a technological age and can turn out manufactured goods with far fewer people, and that therefore we have to aim for more employment in the service industries, which are labour-intensive. But that the right hon. Gentleman refuses to do.

Mr. Kinnock: I am most concerned about the real Britain. The three chairmen of chambers of commerce, the Northumbrian branch of the British Institute of Management, the northern region of the Confederation of British Industry and the north-east branch of the Institute of Directors yesterday asked the Prime Minister in The Times to engage in a programme of public works. They dismissed the idea of income tax cuts as a way to promote recovery and asked the Prime Minister to do something now to bring down unemployment. The hon. Friends of the Prime Minister are telling her that, business men and managers are telling her that, we are telling her that. Why does not the Prime Minister listen and learn and change her policies?

The Prime Minister: If the right hon. Gentleman were to look at the CBI forecast he would find that it is optimistic and confident and that both industry and trade, as my hon. Friend the Member for Cornwall, North (Mr. Neale) said — with record sales, record output, record investment and rising profits—are well pleased.

Mr. Tim Smith: asked the Prime Minister if she will list her official engagements for Tuesday 5 February.

The Prime Minister: I refer my hon. Friend to the reply that I gave some moments ago.

Mr. Smith: What reassurance can my right hon. Friend give to my constituents on airports policy following last week's debate? Can she confirm that it remains Government policy not to build a fifth terminal at Heathrow and to introduce the 275,000 air traffic movements limit when the fourth terminal is opened later this year?

The Prime Minister: I realise that my hon. Friend has a constituency interest in this, but I am sure he will understand that it would be best for me to make no further comment whatever until the Government have considered everything that has been said and decided what policy to bring before the House for its approval.

Mr. Frank Cook: asked the Prime Minister if she will list her official engagements for Tuesday 5 February.

The Prime Minister: I refer the hon. Gentleman to the reply that I gave some moments ago.

Mr. Cook: Will the Prime Minister afford the Chamber some time this afternoon to explain how it is that Sarah Tisdall could be subjected to Government-inspired charges for circulating a somewhat unclassified document, while much more senior officials are to be allowed to give evidence to the Australian Royal Commission on nuclear testing and yet be exempted from perjury? Will she explain how one person can be imprisoned for telling the truth while others can be let off scot-free for telling lies under oath? Will she explain whether, when she refers to law and order, she is referring to her law and order or Parliament's?

The Prime Minister: I do not accept the premise in the hon. Gentleman's question. Prosecutions are not a matter for Her Majesty's Government, as the hon. Gentleman knows full well. I hope that the hon. Gentleman will think it right that we should give every assistance possible to the Australian commission of inquiry. That is what we are doing.

Mr. Fox: asked the Prime Minister if she will list her official engagements for Tuesday 5 February.

The Prime Minister: I refer my hon. Friend to the reply that I gave some moments ago.

Mr. Fox: Will my right hon. Friend accept that, following the opening of the border between Gibraltar and Spain, a cloud hung over the ceremony — the issue of sovereignty? Will she take the opportunity today to reassure our friends in Gibraltar that their views on that issue will be paramount?

The Prime Minister: I believe that the opening of the border between Gibraltar and Spain today was generally welcomed, but I understand the purpose of my hon. Friend's question. Let me make it clear that the statement of 27 November 1984 underlined Her Majesty's Government's intention fully to maintain their commitment to honour the freely and democratically expressed wishes of the people of Gibraltar, as set out in the preamble to the Gibraltar constitution of 1969. As my hon. Friend says, Her Majesty's Government have given assurances to the people of Gibraltar that Gibraltar will remain part of Her Majesty's dominions unless and until an Act of Parliament provides otherwise, and, further-more, that Her Majesty's Government will never enter into arrangements under which the people of Gibraltar would pass under the sovereignty of another state against their freely and democratically expressed wishes. [Interruption.] The Opposition may not take much notice of that; we cherish the freedom of the people of Gibraltar to decide their future.

Mr. Hardy: asked the Prime Minister if she will list her official engagements for Tuesday 5 February.

The Prime Minister: I refer the hon. Gentleman to the reply that I gave some moments ago.

Mr. Hardy: Will the right hon. Lady agree that since she took office as Prime Minister her Government have received £50,000 million in revenue from offshore activity? What has the country to show for it?

The Prime Minister: If the hon. Gentleman had listened to the economic debate that we had the other day


he would have heard the point made — I thought effectively—that when we no longer have the North sea oil assets it will be vital to have replaced them by other income-producing assets. When we came to power we had £15 billion worth of assets overseas. We now have £70 billion worth, sufficient to give us a goodly income now and in future years.

Mr. Heddle: asked the Prime Minister if she will list her official engagements for Tuesday 5 February.

The Prime Minister: I refer my hon. Friend to the reply that I gave some moments ago.

Mr. Heddle: Will my right hon. Friend take time today to consider the position of local councils which have lent

on mortgage £4,000 million over 15, 20 or 25 years? Would it not be better if those local councils made that money available to building societies and other financial institutions and so re-invested the money in rehabilitation, modernisation and improvement of the 23,500 houses which they have left empty for more than 12 months?

The Prime Minister: Yes, I believe that my hon. Friend is right. I notice that he has tabled a question to the Chancellor of the Exchequer about some of the complexities of what would emerge from such a policy, and I shall leave my right hon. Friend to answer that in fuller detail.

Sub Judice Rule

Mr. David Steel: On a point of order, Mr. Speaker. On 28 January the hon. Member for Linlithgow (Mr. Dalyell) raised with you a point of order concerning the remarks of a Member of another place about the pending case of Osprey v. British Shipbuilders. He quoted the following remarks of Admiral Hill-Norton:
'One cannot help feeling that, like the Clive Ponting case, they are doing it to suppress something which may be damaging to the reputation of Government Ministers and officials. The whole thing stinks'." — [Official Report, 28 January 1985; Vol. 72, c. 36.]
He sought your ruling on the matter and you replied that you would certainly do that. I understand that you have written to the hon. Member, but you have not ruled in the House.
First, it is presumably not a matter for you what a Member of another place says, but what is a matter for you, I submit with respect, is whether the fact that this case is not yet set down for trial enables us in this House to ask questions about the background to the case. Perhaps you would also comment on the leader in The Times this morning and say whether it has got the sub judice rule right, as I believe it has.

Mr. Speaker: The hon. Member for Linlithgow (Mr. Dalyell) did raise that point of order on Monday of last week. He asked me to reflect upon the issues raised in the comments made publicly by a Member of another place on matters at present before the courts of law. I went into the matter in great detail and I wrote to the hon. Member giving my conclusions. There was nothing secret about what I wrote. Nevertheless, when I write letters to hon. Members I do not expect copies to be given to the press, at any rate not without my authority. I must say in fairness to the hon. Member for Linlithgow that he has apologised for doing that.
So that there should be no ambiguity about the matter, I will arrange for the publication of my letter in Hansard, in accordance with the statement made by my predecessor on 5 November 1981 about the publication of private rulings from the Chair.

Mr. Steel: Further to that point of order, Mr. Speaker. The point on which I am asking you to rule is whether it

is correct that it is open to hon. Members to ask questions relating to this case until such time as it is set down for trial.

Mr. Speaker: I think it would be wise for the right hon. Member, and indeed for the House, to see my letter in detail. I will say this in clarification. Matters awaiting or under adjudication in a civil court may not be referred to from the time that the case has been set down for trial or otherwise brought before the court. The Select Committee of 1971–72 drew this point to the attention of the House when it said that the House should not expect to see documents in the possession of the court and that the House should be aware of the power of the court over the disclosure of documents submitted to it.
I remind the House that it remains open to any Member to pursue general points about the discovery of documents or in camera hearings in any parliamentary way open to him. Indeed, several hon. Members have already used these procedures.

Mr. John Ryman: On a point of order, Mr. Speaker. While I do not want to prolong matters, may I ask how a Member can know when a case has been set down for trial, it being a matter between the solicitors on both sides?

Mr. Speaker: There are means of finding that out.

Mr. Ryman: There are?

Mr. Speaker: The hon. Member is a lawyer. He should know.

Mr. Eric S. Heifer: On a point of order, Mr. Speaker. You said that you did not expect private letters written to hon. Members to find their way to the press. May I have an assurance that once you have retired from your present job the details of any private conversations that you have had with hon. Members will not, certainly until 30 years are up, find their way into various publications? Although I had no objection to two private conversations of mine finding their way into a book, I raise the matter because the principle involved should be of concern to the House.

Mr. Speaker: I know to what the hon. Member is referring, but it is not a matter for me. It may be of comfort to the House to know that I have no intention of writing anything.

Prime Minister's Question Time

Mr. Norman Buchan: On a different point of order, Mr. Speaker. At Question Time today a question was asked of the Prime Minister about Gibraltar. It may or may not have been what is commonly known as a plant. Whether or not it was, it had all the appearance of one. More important is the fact that a carefully prepared lengthy statement was read by the Prime Minister in reply to that question. We recognise that inevitably the right hon. Lady must carry voluminous notes with her. On this occasion, however, she read that statement from beginning to end in what was precious Back Benchers' time. Was that not an abuse of the House?

Mr. Speaker: Order. I must say, in fairness to the hon. Member for Shipley (Mr. Fox), whose question it was, that, although I have heard of the planted question theory, I know nothing about it.

Members of Parliament (Lobbying by Constituents)

Mr. John Prescott: On a point of order, Mr. Speaker. I seek your advice on the important matter of the right of individuals to approach their Members of Parliament in the House. You will be aware that at Question Time I attempted to ask the Secretary of State for Employment about the rights of employees of his Department to approach this House next week to protest about redundancies and closures. I have been told that, even if they come here to lobby their Members of Parliament in their own time, they will be threatened with the Industrial Relations Act. How can we seek to defend the rights of people who wish to see their Members of Parliament about the Government's actions?

Mr. Speaker: Order. I do not think that that is a matter for me.

Mr. Neil Kinnock: Further to the point of order raised by my hon. Friend the Member for Kingston upon Hull, East (Mr. Prescott). Although I recognise the force of your view, Mr. Speaker, that the approach by citizens to this place to see their Members of Parliament may not directly be a matter for you, the right of citizens to come here to see their Members of Parliament has been a jealously guarded privilege of simply being a citizen of this democracy. If, by virtue of the employment of people, the Government are able to threaten them with action as a consequence of their coming here in their own leave time to lobby Members of Parliament, to whom should those people go for protection in respect of what is perceived to be a basic right to come here to lobby Members of Parliament? Your guidance on this issue would be appreciated, Mr. Speaker, otherwise we shall be in the extraordinary position of having a Government as an employer seriously impeding by threats the right of people to see their Members of Parliament at Parliament.

Mr. Speaker: I fully accept that there is a right on the part of citizens to lobby their Members of Parliament, but whether they are given leave to do so cannot be a matter on which I can be held responsible. I do not think that the right hon. Gentleman suggests otherwise. If he is suggesting that privilege is involved, he should write to me in the usual way and I shall certainly consider the matter.

Mr. Tony Benn: Before you give a ruling on this matter, Mr. Speaker, may I ask you to read the report of the Committee of Privileges of 1940, which sets out that a serving officer approached Captain Duncan Sandys, who was then a Member, with information about deficiencies in the nation's defences, as a result of which the War Office took action to prosecute the officer concerned. The Committee of Privileges took up the matter, interrogated the then Prime Minister, and reported that any matter brought by a citizen to a Member of Parliament with a view to action in the House was itself privileged. That was an important judgment 45 years ago and is directly relevant to the issue which my right hon. Friend has brought to the attention of the House. It would be a terrible thing, Mr. Speaker, if in an aside you were to cast off the privilege—

Mr. Speaker: Order. It is intolerable that the right hon. Gentleman should seek to prejudice any consideration that I may give to this matter. I shall look into it in the greatest detail. I resent it that the right hon. Gentleman should take the view that I propose to cast privilege aside.

Mr. Benn: With the greatest respect, I was making no such implication, Mr. Speaker. You said, Mr. Speaker, that a question of of privilege might be raised. I took up that point and observed quite correctly, because I remember the case very well, that the House ruled that it was a privilege of a Member to receive information from his constituents with a view to action being taken. I said that it would be a bad thing if that precedent were cast aside. I was casting no implication or reflection upon your ruling. I made my remarks in defence of those who come to Parliament for justice, a right which it should be the duty of the House to uphold.

Mr. Speaker: If the right hon. Gentleman reads the report of these exchanges in Hansard tomorrow, he will find that that is exactly what I said. I said that there is a right of citizens to come to this place. I said also that I would look into the matter. As I understand it, the right hon. Gentleman may raise the issue as a matter of privilege. In that event I shall look into it most carefully.

BILL PRESENTED

INSURANCE FEES

Mr. Secretary Tebbit, supported by Mr. Ian Stewart, Mr. Paul Channon and Mr. Alex Fletcher, presented a Bill to provide for the payment of certain fees by insurance companies and the Council of Lloyd's: And the same was read the First time; and ordered to be read a Second time tomorrow and to be printed. [Bill 74.]

Freedom of Probate

Mr. Ken Weetch: I beg to move,
That leave be given to bring in a Bill to amend the Solicitors Act 1974, as it applies to England and Wales, to enable approved trust corporations to apply for grants of representation to the estates of deceased persons in certain non-contentious cases without the intervention of a solicitor.
The Bill is a simple and limited measure, but it has important and beneficial implications. It seeks to bring about a simplification of, and improvement in, the procedures for obtaining grants of representation, the most important of which relates to applications for probate. Essentially, the main purpose of the Bill is to amend section 23 of the Solicitors Act 1974 in a way that will eliminate a restrictive practice which at present has statutory authority.
Every year thousands of people wish their wills to be executed by trust corporations. Usually, these are departments of banks and insurance companies which specialise in executor and trustee work. Many of these institutions are household names in the business and commercial world. When they act on instructions as executors or administrators, it can be said that they have generations of experience, expertise and specialist knowledge, and financial probity which is beyond doubt.
Unfortunately, when acting as executors or administrators under a will, trust corporations are obstructed by two restrictive practices which have statutory authority—the Non-Contentious Probate Rules 1954 and section 23 of that haven of restrictive practices, the Solicitors Act 1974.
In simple terms, trust corporations in thousands of cases do all the time-consuming and complex work involved in executing a will. For example, they can construct a balance of assets and liabilities, undertake all correspondence, make allocations to beneficiaries and settle most complex tax matters. In a sentence, they can do all the real work. The only thing that they are not allowed to do is to prepare the application form, which is a simple exercise. They are prevented from posting the application to the probate registry to be dealt with, which is an exercise even more simple than the first. Although this is one of the simplest tasks of all, and is straightforward clerical work once the details have been supplied, according to section 23 of the Solicitors Act the work must be completed, and the application made, by a solicitor. The solicitor's task is confined to copying information provided and posting the application.
All that is totally needless and indefensible. It is also expensive. If officials of the trust departments could make simple applications themselves, in an average case the consumer would be saved between £100 and £150. This would happen time and time again. The unnecessary framework of correspondence could be avoided, time could be saved and beneficiaries could receive more quickly what was due to them.
The Bill recommends nothing that is new in principle. The ground has already been well researched and explored from consumer and legal angles. The whole matter was investigated by the Royal Commission on legal services. Recommendation 19.3 reads:
Trust corporations should be permitted, in non-contentious cases, to apply for grants of probate without retaining a solicitor for the purpose.
Substantially the same recommendation was made by the National Consumer Council in its report on banking services and the consumer. I refer the House to section 11 of the report on executor and trustee services.
In recent years professional services have been brought under critical scrutiny by many people, including the present Government, and not before time. Some of the worst restrictive practices are within the framework of professional organisations in one form or another. The Bill continues this process of scrutiny. If the measure becomes operative, it will make dealing with probate matters in the circumstances that I have described cheaper, more cost-effective and quicker. The Bill promotes legitimate competition for the consumer.
Although the Bill represents a limited reform, it breaks an undesirable monopoly and a restrictive practice. It is the first step along the way to reform and improvement in a complex part of consumer affairs. I commend the Bill to the House.

Question put and agreed to.

Bill ordered to be brought in by Mr. Ken Weetch, Mr. Austin Mitchell, Mr. Robin Corbett, Mr. Robert McCrindle and Mr. Ian Wrigglesworth.

FREEDOM OF PROBATE

Mr. Ken Weetch: accordingly presented a Bill to amend the Solicitors Act 1974, as it applies to England and Wales, to enable approved trust corporations to apply for grants of representation to the estates of deceased persons in certain non-contentious cases without the intervention of a solicitor: And the same was read the First time; and ordered to be read a Second time upon Friday 17 May and to be printed. [Bill 75.]

Orders of the Day — Films Bill

As amended (in the Standing Committee), considered.

New Clause 1

FINAL PAYMENTS BY BRITISH FILM FUND AGENCY

'(1) Where the British Film Fund Agency receive any amount from the Secretary of State in accordance with section 3(2A), that amount shall be added to the moneys available for distribution by the Agency under the distribution regulations in respect of the final distribution period.
(2) With the consent of the Secretary of State payments under the distribution regulations in respect of the final distribution period may be made by the Agency after the date by which they would otherwise have been required to be made by virtue of the regulations.
(3) Where—

(a) any claim made under the distribution regulations or any corresponding earlier regulations has been accepted by the Agency and they have allocated an amount for the payment of that claim; but
(b) owing to any lack of information relating to the claimant, or owing to any other circumstances outside their control, they have been unable to secure the payment to the claimant of that amount,

they shall take such steps as they consider appropriate for the purpose of facilitating the securing of that result.
(4) Where the Agency take such steps as are mentioned in subsection (3) with respect to any claim but are nevertheless unable to secure the payment to the claimant of the amount in question before the relevant date, the Agency shall on that date discount the claim for the purposes of the distribution regulations, and the amount in question shall—

(a) in the case of a claim in respect of a period other than the final distribution period, be added to the moneys available for distribution by the Agency under the distribution regulations in respect of the final distribution period;
(b) in the case of a claim in respect of the final distribution period, be paid to the Secretary of State to be dealt with by him as if it were an amount received by him as mentioned in section 3(2)(b).

(5) In subsection (4) "the relevant date", in relation to a claim falling within paragraphs (a) or (b) of that subsection means such date as may be fixed by the Secretary of State for the purposes of that paragraph; and that date may—

(a) in the case of paragraph (a), be earlier than the date by which payments in respect of the period immediately preceding the final distribution period are required to be made by virtue of the distribution regulations;
(b) in the case of paragraph (b), be earlier than the date by which payments in respect of the final distribution period are so required to be made.

(6) In this section "the distribution regulations" and "the final distribution period" have the meaning given by section 2(1) (but subject to section 24(4)(b).)'—[Mr. Norman Lamont.]

Brought up, and read the First time.

The Minister of State, Department of Trade and Industry (Mr. Norman Lamont): I beg to move, That the clause be read a Second time.

Mr. Speaker: With this it will be convenient to take Government amendments Nos. 3, 4 and 8.

Mr. John Gorst: On a point of order, Mr. Speaker. I wonder whether I could raise now, so that you can consider it rather than at the last moment, when we reach it, your ruling, as shown on the selection list, that amendment No. 7, to which I have put my name, and amendment No. 32, which appears two amendments later,

should be taken separately. It may not be apparent, but many of the points that I wish to make on amendment No. 7 are relevant to and overlap those in amendment No. 32. I wonder whether, for discussion purposes, you would rather consider taking the two together.

Mr. Bryan Gould: Further to that point of order, Mr. Speaker. I am pleased to support the suggestion made by the hon. Member for Hendon, North (Mr. Gorst). It may well be for the convenience of the House if the debates were taken together in that way.

Mr. Speaker: Is the Minister happy about that?

Mr. Norman Lamont: I hope that this will not be the only time this afternoon, Mr. Speaker, that there will be a degree of consensus on something. What has been suggested would be the logical thing to do.

Mr. Speaker: If the House agrees, that is admirable. We shall take the debate on amendment No. 7 and link it with the debate on amendment No. 32.

Mr. Lamont: Essentially two purposes are served by the new clause. The first purpose is achieved by subsection (1), which deals with the distribution by the British Film Fund Agency of the surplus funds of the National Film Finance Corporation. When the NFFC is dissolved, its forward commitments — that is, its contractual obligations to provide finance for particular films together with enough of its cash to meet them—will be transferred to the "son of the NFFC" or, as the hon. Member for Dagenham (Mr. Gould) may have noticed from the newspapers, the British Screen Finance Consortium as it is now called. It is likely that that will still leave a significant surplus of assets. As the hon. Gentleman will recall from Committee, it is the Government's intention that that surplus should be transferred to the BFFA and distributed by the agency to the makers of eligible films in the same proportion as that paid in the final distribution period to the makers of eligible films out of moneys deriving from the levy.
The amount payable in respect of any one film, when aggregrated with the sums due from the levy, will not exceed the normal amount specified in regulation 6(3) of the distribution regulations — £500 million for films of over 33 minutes and £50,000 in all other cases. We believe that the new clause represents the fairest and most sensible way of disposing of those assets by ensuring that they return to the industry in accordance with the Eady pattern.
The second purpose, which is achieved by subsections (3) and (4), is to absolve the BFFA from any potential liability in respect of moneys held by the agency which have not been paid to potential recipients for a variety of reasons. The current duty of the BFFA is set out in regulation 4 of the Film (Distribution of Levy) Regulations 1982, which reads:
The British Film Fund Agency … shall make payments in accordance with the provisions of these Regulations, out of moneys available for distribution, to the makers of eligible films in respect of those films.
The procedure for making claims on the fund is set out in regulation 11. By regulation 11(4) the agency can require supporting certificates or further information to be provided. However surprising it may seem, there are cases each year when potential recipients of Eady money fail to comply with the regulations of fail to cash cheques sent to them by the BFFA, and in the legislation we need to make provision for such cases. Subsections (3) and (4) of the


new clause provide that any claimant who has failed to notify the agency of a change of name or registered address, or who has failed to accept any moneys paid to him by the agency, shall, after a period to be fixed by the Secretary of State, be debarred from claiming his money.
Subsection (5) of the new clause is concerned with the time limits to be placed on payments to be made by the agency. Our intention is that the payment allocated by the BFFA should be taken up within two months of the penultimate distribution payment. If it was not, it would be forfeited and the money would be added to the sum to be distributed by the BFFA in the final distribution period.
With regard to claims relating to the final distribution period, the intention is that the potential recipients will have two months from the termination of the levy in which to make their claims and to comply with any requirements set by the BFFA. If the BFFA accepts a claim and allocates a payment in the final distribution, that payment will have to be taken up within two months of the final distribution being made.
If, as is possible, there is still some money left at the end of the final period which the BFFA has been unable to dispose of in that way, we intend that it should be vested in the Secretary of State, who shall deal with it as he thinks fit for any purpose connected with the British film industry. Such sums are likely to be very small.
I hope that hon. Members will agree that this sensible and technical new clause is desirable and will support it.

Mr. Gould: I thank the Minister for that explanation of what he correctly described as a technical new clause and body of amendments. We do not intend to detain the House on this matter. We accept that, for good and practical reasons, the Eady levy has gone, and that inevitably there will be transitional problems to be cleared away because of the statutory duties at present imposed upon the NFFC and the BFFA.
As I understand it, the Minister is trying to make room for more discretion and flexibility on the part of the BFFA, both in respect of what it might do with any surplus and what the Minister might do with assets from the NFFC which might not be passed over to the consortium under clause 2. We accept that these are technical matters, and we are content to accept the new clause.

Mr. Norman Lamont: I might have done well to give the explanation in my own words in the first place. We are simply allowing the BFFA to distribute the surplus within the NFFC to the makers of films in accordance with the formula of the BFFA. The son of NFFC has its own separate arrangements. The Committee heard about them. It will be given its money. However, surplus assets within the NFFC are to be distributed to film makers, when it is dissolved, according to the formula which has applied in the past via the BFFA. We need to amend the legislation rather than the regulations relating to the BFFA, so that money given to it by the Secretary of State can be distributed in that way.
On reflection, my own explanation is the better of the two.

Question put and agreed to.

Clause read a Second time, and added to the Bill.

Clause 2

PROVISIONS RELATING TO TERMINATION OF LEVY ON FILM EXHIBITORS

Mr. Norman Lamont: I beg to move amendment No. 1, in page 2, line 5, at end insert—
'(1A) In relation to the final levy period section 2(3) of the 1981 Act (minimum and maximum amounts to be yielded by way of levy in respect of each levy period) shall have effect as if for "neither less than £2 million nor more than £12 million" there were substituted "not more than £12 million".'.

Mr. Deputy Speaker (Mr. Ernest Armstrong): With this it will be convenient to take Government amendment No. 2.

Mr. Lamont: The amendment removes the requirement in section 2(3) of the Film Levy Finance Act 1981 that the Eady levy must not be less than £2 million annually. The purpose of the amendment is to enable us to fulfil the commitment that we gave in Committee that the Eady levy would cease at the earliest possible opportunity, consistent with commitments made to Eady beneficiaries. I remind hon. Members that current recipients of Eady levy funds include the National Film and Television School and the British Film Institute Production Board. There is also a statutory obligation for a pro-rata payment to be made to the National Film Finance Corporation.
As I said on Second Reading and in Committee, we consider that the Eady levy is an increasing burden on cinemas, and it is our intention to end it as soon as possible. However, the commitments that I have outlined must be met. While on the basis of past experience we cannot forecast with precision the rate of build-up of levy receipts, nor therefore the date when sufficient sums will be available to meet those commitments, we see no advantage in requiring the yield in the final levy period to be higher than absolutely necessary.
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There is widespread sympathy for the plight of the cinema sector and general agreement that the Eady levy should be ended quickly. The amendment will facilitate that process. It will enable us to end the levy more quickly while honouring our commitments. Therefore, I commend it to the House.

Mr. Jeremy Hanley: I am grateful to my hon. Friend for his statement. When I tabled amendments to persuade the Secretary of State to scrap the Eady levy as early as possible, he promised that that would be achieved and that the amendments were unnecessary. We have now a happy compromise, as long as the commitment to scrap the Eady levy remains. The period set down in the Bill is still too long. I would have preferred a shorter period. I hope that the Secretary of State will exercise his option at the earliest convenience.
We should not leave this part of the Bill without saying that the Eady levy has been destructive to the cinema industry in taking away much needed finance for the improvement of cinemas. Great tribute should be paid to cinema owners for trying greatly to improve the facilities, to make the public feel that the cinema is more attractive than it has been for 30 years, and to bring them back to the places where films should be seen. No one who has


seen films on television can say other than that when a film is shown in a cinema, its scope, sound, vision and colour is improved, as is the experience of seeing it.
I should be grateful if the Secretary of State will exercise his option as soon as possible to ensure that more people are encouraged back to the cinema to see films as they should be shown.

Mr. Gould: I cannot fully endorse the strictures of the hon. Member for Richmond and Barnes (Mr. Hanley) on the effects of the Eady levy on the cinema industry. I would have more sympathy for his point if there were genuine evidence that the money that the cinema exhibitors were going to save through not having to pay the levy would be channelled back into the refurbishment of cinemas. He may be able to assure me that he believes that to be the case. Unfortunately, I see little evidence that we can be as sanguine as that.
On the other hand, I entirely accept his point that the attraction back of cinema audiences is by no means a lost cause, as the experience of French cinema proprietors has shown recently. Therefore, I hope that, whether or not they are exempt from the levy, cinema exhibitors will try their utmost through the refurbishing of cinemas and perhaps lower prices to attract audiences back to cinemas.
I accept the Minister's statement that these are essentially technical amendments to overcome some of the transitional problems. Given that we see no issue of principle in the abolition of the Eady levy at present, at least in terms of the simple disappearance of the levy, we are content to accept the amendment.

Mr. Norman Lamont: I am grateful to my hon. Friend the Member for Richmond and Barnes (Mr. Hanley) for what he said. I agree with what he said. It is our intention that the levy should be ended as soon as possible, because it has been a great burden on cinemas. During our proceedings we have sometimes concentrated too much on the problems of the film industry, without considering how they relate to the cinema industry. Without a flourishing theatrical exhibition industry, there is a great problem for the film industry. The rate at which cinemas are closing is truly alarming. That is a problem not just in itself, but in maintaining a British film industry, which is extremely important.
I understand the reservations of the hon. Member for Dagenham (Mr. Gould). However, when he says that he hopes that seat prices will be reduced as a result of the removal of the Eady levy, I hope that he is not under any illusion about the state of the finances of the cinema industry. That is the problem. We hear a lot about the domination of Thorn-EMI and Rank, but even Rank cinemas are hardly a gold mine. To be honest with the House, I must say that it will be a struggle to maintain the cinema industry in the United Kingdom. We want to maintain it. The Government are doing everything that they can, but we should not be other than hard-headed and realistic about the problems that it faces.

Mr. Gould: I do not doubt for a moment the financial precariousness of cinema exhibition. I hoped to show that the way forward did not necessarily lie in constantly increasing prices while failing to invest in cinemas. I hope that cinema proprietors may take to heart the lessons learnt in France, the United States and elsewhere—that better cinemas and lower admission prices can substantially increase audiences.

Mr. Lamont: I agree with that; but to reinvest in cinemas one must be either earning or have a good prospect of earning profits. The hon. Gentleman referred to what has happened in France. However, cinema attendances are different in different countries. It is not easy to explain why the pattern of decline is different in the United States or in France from the United Kingdom. Given the precariousness of the finances of the cinema industry in the United Kingdom, we should be extremely careful before we are too critical of it.

Mr. Tom Pendry: First, congratulations are in order. The Government have been forthcoming. We urged them to adopt the report of the Monopolies and Mergers Commission on the barring question. It is a good thing that independent cinemas, such as those in Glasgow and Manchester, will now have the opportunity to have films earlier than they would normally have them. I should have thought that the Government might say to cinemas in those areas that, because they are to have pictures earlier than normal and because the Eady levy is being removed, they should adopt a policy of reducing admission prices and do more than they are doing at present. They could refurbish their cinemas and attract more people to them, and see, during the experimental perod of 12 months, whether that works. If they do that during the experimental period, we may be able to judge whether it is a good thing for the industry. It would be worth while if the Minister applied his mind to that aspect, given the Government's response to the pressure from both sides of the House to adopt the MMC's report.

Mr. Hanley: I wonder whether the House is aware that throughout British Film Year the ABC, Odeon and Cannon Classic chains are spending £1 million a month on refurbishing British cinemas, irrespective of falling attendances and even before the Eady levy is finally dead and buried. Therefore, the commitment to the cinema industry by organisations which must satisfy shareholders is great. That commitment can only increase if the Eady levy is scrapped as soon as possible.

Mr. Lamont: I am grateful to my hon. Friend the Member for Richmond and Barnes (Mr. Hanley) for drawing attention to that fact. In recognition of British Film Year, companies such as Thorn-EMI are investing in their cinemas. As everyone has agreed, a circular problem with the cinema industry is that declining attendances have been accompanied by poor facilities, and poor facilities have led to a further decline in attendances. It is welcome news that Thorn-EMI believes that the present position of that section of the industry is not irreversible.
I am grateful to the hon. Member for Stalybridge and Hyde (Mr. Pendry) for what he said about our response to the Monopolies and Mergers Commission's report and the experiment that will be carried out in two cities. We are going rather wide of the amendment — I imagine that this matter will be discussed on Third Reading — but I agree with what Opposition Members said about competition in the exhibition sector. The hon. Member for Dagenham (Mr. Gould) is right. Had there been more competition in the exhibition sector during the past 20 or 30 years, the state of the cinema industry might be different today. If it had been easier in the past for entrepreneurs and independent cinema operators to enter that sector, the present position of the industry may have been very different.
However, as the Minister responsible for such matters, I must deal with the present position. If any hon. Member were tempted to ask, "Why only an experiment?", I would have to reply, "Because even with Thorn-EMI and Rank I must consider the finances of their cinemas, and an experiment is the most sensible way of proceeding in the present state of finances." On the basis of what has happened in those two areas, we shall see the effect on independent cinemas and make decisions of value to the exhibition sector as a whole. However, the MMC report and our experiment are important points.

Amendment agreed to.

Amendments made: No. 2 in page 2, line 6, leave out
'the final levy period section 4 of the 1981'
and insert
'that period section 4 of that'.

No. 3, in page 2, line 16, leave out subsection (3).

No. 4, in page 2, line 32, leave out 'this section' and insert
'section (Final Payments by British Film Fund Agency)'. — [Mr. Norman Lamont.]

Mr. Norman Lamont: I beg to move amendment No. 5, in page 2, line 39, leave out from 'order' to end of line 44.
Hon. Members will not be surprised to learn that the Government consider it necessary to remove the provision, which was inserted in Committee, that the ITV companies and the BBC should be levied on the basis of audience figures for the films that they broadcast. The Government's position on this important matter was made clear in the lengthy debate in Committee, but I wish to go over some of the points again and to explain why we believe it right to remove this provision.
I shall deal later with the practical arguments against imposing a levy on television, but first I shall deal with the principle. When the provision was inserted by the Committee, against the Government's advice, it was one of several amendments embodying in one form or another the principle of a levy. Some were directed at a levy on video tapes, whether blank or pre-recorded, some were based on the principle of compensating the copyright owner, and others were concerned with replacing the Eady levy as a mechanism for filling a production fund to finance new films or even to support the National Film and Television School. The amendment that attracted most support, or least opposition, was the provision now incorporated in clause 2(5). It proposes that a levy should be imposed on the BBC and ITV companies to recompense film makers whose films are shown on television on a basis that is related to the number of viewers who watch those films.
Underlying the proposition is an assumption, or perhaps an assertion, that the BBC and ITV pay too little for the films that they show. The argument is that if millions of people watch a film on television the price paid by the broadcaster should reflect the size of that audience, at a level closer to the film industry's assessment of what the film is worth — in other words, the seller's valuation should prevail. The advocates of the proposition argue that the prices paid for films are too low because of the so-called duopoly of the BBC and ITV.
The recent publicity about the purchase of "Dallas" by Thames Television has, it is claimed, revealed the existence of a gentleman's agreement between the BBC

and ITV, and that is said to support the view that the broadcasters, through their duopoly, can depress the cost of the programmes that they buy. Whatever may be the case with a television series, whether a new one or one that has already been shown in Britain, I do not believe that the "Dallas" episode is relevant to our discussion, which is concerned with the purchase of feature films.
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The BBC and ITV have represented a duopoly, in that, until recently, they were the only television channels available. But that is changing, with Channel 4 and its impact on film making, and the introduction of DBS and cable television. I have yet to be convinced that those negotiating with the BBC and ITV companies cannot fight their own corners effectively without the state lumbering to the rescue, brandishing a cumbersome and unwieldy levy as a blunt instrument. We must accept that some films will, in their nature, be more attractive to one channel than to the other, and in such cases there will be only one effective buyer. Some films will be regarded as unacceptable for showing on television, but the majority are films that both channels would be happy to broadcast and, therefore, there is competition for them. With the advent of cable television and satellite broadcasting, the duopoly argument, flimsy though it was, begins to diminish. I am not persuaded that we need an artificial statutory recycling mechanism in a market which, whatever its limitations, is capable of operating without the distortion that would be introduced by a levy.
Leaving aside the question of principle, this provision raises several practical problems. One of the first questions is, how should we fix the amount of the levy? Presumably we must start at the other end and ask, "How much do we want to raise," and then spread it over the number of viewings. But viewings of what? The clause refers to feature films, but should we include films whose producers have retired from the industry or who are no longer alive? If so, it is difficult to see what benefit the provision would produce in terms of film production. Indeed, we must face the fact that the vast majority of films shown on television are foreign films, mainly American.

Mr. Gorst: Is my hon. Friend aware that if the considerations that he is now enumerating had been discussed when the Eady levy was introduced any competent civil servant would have disposed of them almost as quickly as the Minister is enumerating them now?

Mr. Lamont: I am not sure that the Eady levy was such an outstanding success. Indeed, the Bill is removing the Eady levy because of its effect on the cinema. I have not yet deployed the important argument that a levy would have a significant impact on the amount of money that the BBC and ITV companies could devote to film production.

Mr. Gorst: May I help my hon. Friend on his point about the success or failure of the Eady levy? It is extraordinary that the levy has lasted through one Government after another for decades, if what I infer from my hon. Friend's comments about its failure is true. It is going now because cinema attendances have fallen and it has outlived its purpose.

Mr. Lamont: Many would think that it would have been better to have removed the Eady levy some time ago. I cannot see that it has done anything but harm to the cinema in recent years.
My hon. Friend, in his two interventions, has slightly shifted his ground because he started our interchange by discussing the practical problems rather than the principle. I was about to say that, in addition to the principle, I think that there are these practical problems. One of them—and this is again a parallel with the Eady provisions—is that many, if not most, film makers, if by that is meant the producers, have often signed away their television rights to distributors. My hon. Friend, who is expert in these matters, will know that that is what happened in many cases with the Eady levy. Film producers signed away their rights and the Eady levy proceeds in some cases did not go to the people for whom they were intended by legislation. Thus the proceeds of the levy might not be payable in most cases if the producers have not retained their television rights.
Should we assume that we are meant to consider only films originally intended for theatrical release? If so, that would exempt made-for-television films, notwithstanding that their mode of manufacture is not easily distinguished from cinema film making. How would we treat films such as those financed by Channel 4 with cinema and television exhibition in mind? A film like "The Draughtsman's Contract" comes to mind immediately.
Even if it is possible to devise some definition of film that suits everybody, that still leaves the problem of assessing how much should be levied on the films in question. The provision proposes that the levy should be based on the numbers of viewers watching the film, but this is by no means as simple as it sounds. For one thing, there is no reason that a film shown in the afternoon should be given the same value per audience number as something shown at peak time. If we are to take account of this, not only must we introduce a system requiring extensive calculations relating to the levy on each film to the audience that watched it, having further identified which films are levyable, but we must weight the audience numbers according to the time of day when the film was shown, and this is surely not sensible.

Mr. Tim Brinton: On the narrow point in which my hon. Friend asserted that there was no reason that a film shown in the afternoon should have the same levy put on it as one shown in the evening at peak time, surely this is right because the afternoon audience is smaller than the evening audience. It is therefore perfectly equitable.

Mr. Lamont: I merely said that this is a point that can be argued. There are people who agree with my hon. Friend, and obviously this is the basis on which advertising fees are negotiated. If it is to be weighted in this way, some people think that it raises considerable complications. That is my only point. I do not wish to come down on either side of the argument because I am not in favour of the levy anyway. This question has to be resolved and, if it is resolved in a particular way, it raises considerable complications.

Mr. Roger Gale: My hon. Friend deploys the argument beautifully, but he must be aware that the muliplicity of calculations is no argument at all. It is a calculation that is made every time a television

commercial is shown for repeat fee purposes. There are infinitely more commercials shown on television than even the number of feature films.

Mr. Lamont: My objection, as I have made crystal clear, is based upon principle as well as on what might be thought of as practical difficulties.

Mr. Hanley: My hon. Friend said that another difficulty is the definition of a film—what exactly is a film in this context? I submit that it is surely anything that must receive a British Board of Film Censors certificate.

Mr. Lamont: My hon. Friend is obviously able to solve this problem just like that. If there were to be a levy, my hon. Friend would be an admirable person to implement it. These questions have to be addressed. As I have said, my main objection concerns not the practicality but the principle of the matter. I wish to outline some of the questions that have to be addressed.
Would it not be simpler then, if some of my hon. Friends' arguments are to be followed, to charge the BBC and the independent television companies a sum related to the number of films shown, or should we not cut through all the complication, make it simpler still and ask them all for a compulsory contribution to a film production fund, perhaps £5 million each? After all, it seems to me that it does not matter how crude or sophisticated we make the basis of the levy if the end in sight is the same — to squeeze money out of television to finance a film production fund. That is what it is all about. At least it would have the twin merits of administrative simplicity to collect and of concentrating the proceeds on the British film industry. But there remains the interesting question of how and by whom the spoils should be divided.
The results of any levy scheme—and I think that this is an important and central point—must be to reduce the funds available from the BBC and ITV. The BBC's income is finite, limited for the most part to the income from the licence fee. A surcharge on the cost of films must therefore mean reductions elsewhere. This would probably be true also of the ITV companies. The most likely result is a reduction of what the channels would be prepared to pay to buy levyable films; otherwise the cuts would probably fall upon the most expensive television programmes — drama programmes. Thus, helping the film producers might be at the expense of those — directors, technicians and actors—working in television.
Any cuts would also be likely to fall on work commissioned from independent producers, which none of us would want. Instead of promoting an outward-looking approach to film and cinema by television, a levy seems likely to have the opposite effect.
Alan Howden, who is the BBC's general manager for programme acquisition, offered some interesting and relevant observations in a recent article in the journal Broadcast. He accepted that, as has been alleged, many films are purchased cheaply, but pointed out that they are often old material for use during the day and late at night. He said:
They are there because they are cheap; if they were subject to levy we would have to replace them with other cheap imported material".
On the other hand, even routine feature films are bought at high prices when compared with other purchased material such as American series, despite the fact that


films rarely command the huge audiences that they once did, and are nearly always beaten in the audience ratings figures by programmes like "Coronation Street".
Mr. Howden gives a gloomy but I think realistic forecast of what would happen if a levy were introduced. He said that films
would be swept away in favour of old American television and other imports; purchases of new films would be cut back; prices would be pushed down to offset the levy wherever possible and the net return to the film industry would almost certainly be reduced".
I cannot believe that that is what hon. Members want. In my view, it is necessary for those who are in favour of the levy to demonstrate that imposing this extra impost on the companies or on BBC television will not result in a reduction in the resources devoted to film making by the companies or by the BBC or merely an increase in imported material. We hear constantly about the cheapness of American imported material. I recall that Sir Ian Trethowan and others who appeared before a Select Committee of the House referred to the cheapness of American material that they could use. If we are to have this levy, it is up to hon. Members who wish to support it to demonstrate the need for it. I have not heard any argument that has demonstrated to me that that would not be the inevitable consequence of imposing such a levy.

Mr. Gorst: I remind my hon. Friend that many films—the Bond films are an example—are shown time and again on television. I cannot think of the number of times that my children have watched "Towering Inferno", for example. I invite my hon. Friend to agree with me that the fact that they are shown so often is not necessarily because they are cheap but because there is a demand to see them time and again. I invite my hon. Friend to contrast that with the present situation in which the BBC and ITV are pouring money into certain programmes. These programmes are not repeated anything like a similar number of times. That must have something to do with popularity and with the fact that the BBC and ITV purchasers are unwilling to pay a fair price for something which is attractive to the audience.

Mr. Lamont: That is true. My hon. Friend refers to the popularity of films, particularly the Bond films. However, unfortunately, the popularity of those films and the proportion of television time that they take is falling. We have been told again and again by the BBC and ITV companies that the proportion of television time for films is falling. I am a great watcher of the Bond films, which my hon. Friend mentioned, but sometimes I feel that I am rather old fashioned. However, I am told that the viewing figures that those films command today are less than they were some years ago, not just because they have been seen many times on television, but because they are taking up a smaller proportion of screen time than before. It is about 11 per cent. of screen time on Channel 4 and 8 per cent. for the ITV companies. We have been warned that that figure is likely to diminish further and that the imposition of the levy might mean that films would take up even less time.

Mr. Gould: I am always extremely suspicious about an argument that rests on a proportion. I am sure that the

Minister will concede in this case that any such argument, would have to take account of the fact that the hours of television broadcasting have been very much extended by, for example, breakfast television when one does not normally watch feature films. Although I do not wish to contest in detail the statistics that the hon. Gentleman may wish to use, he should take account of the fact, as we do, that an argument of the sort that he has just addressed to us is not necessarily convincing.

Mr. Lamont: I would not rest the argument on the figures or proportions. I say this on the basis of what I am advised and told by people who know much more about these matters than I do. We are talking about the trends and viewing figures that feature films command on television. It has been clearly stated to us and the Select Committee that the feature film is not commanding the viewing figures that it did a few years ago. Therefore, if the levy were imposed, the temptation would be for the budgets on such films to be reduced.
Notwithstanding the arguments about a duopoly, this is the central point. I do not see why it is not open to the makers of films in this widening market, where there will be a voracious demand for film in future years, to set their price and argue with those who want and need to have more films. It seems that that is a better system and a more sensible way to do it than to introduce an artificial mechanism taxing the companies and recycling the money back to the industry.

Mr. Chris Smith: If the Minister is arguing that the makers of film should effectively bid up the price of their product, will he comment on the argument advanced in an article in The Sunday Times in December, reporting a conversation with Mr. Halliwell, the man in charge of buying foreign films and series for ITV? The article states:
The high-gloss peaktime series cost an average of $1m per hour to produce, but because of an unspoken agreement not to bid up the price, ITV and the BBC are able to buy them for around £25,000 an hour.
That is an incredible difference in price. Perhaps the Minister will comment on that unspoken agreement, which depresses the price available to the fiim makers.

Mr. Lamont: I know of no such arrangements, though I am certainly prepared to look into that. However, the hon. Gentleman is talking about series rather than film features. In the newspapers, we have seen what has happened with the bidding over "Dallas". If there is some such arrangement, it seems to be creaking at the seams, but I entirely agree that the matter deserves some examination.
Nevertheless, we are talking about feature films for which the total cost and the cost per time is somewhat less. It may not be a perfect market, but there is an element of competition. There will be an expanding market and a voracious appetite by the media for more feature films. I cannot see how the imposition of the levy will other than put the squeeze further on a sector that is already under considerable pressure. Therefore, that is not the appropriate way to deal with the problem. I commend the Government amendment to the House.

Mr. Gould: I think it is fair to say that the Opposition gave a far from hostile welcome to the first two groups of Government amendments, but I am afraid that it is at this point that hostilities commence. The Minister opined that


we would not be surprised that he had felt obliged to table the amendment. It is true that we are not surprised. Unfortunately, the decision has been trailed in several press reports, but we are disappointed because we believe that the Committee reached the right view and, by a majority, and after extensive discussions, hit upon a means whereby the future of the film industry could be made much brighter than it would be without any such source of revenue.
We are also a little perturbed that the campaign of the television companies seems to have succeeded, at least with the Government. We feel that that may be a worrying portent of things to come; a sign of the way in which some of the major battalions in the industry can organise and structure the industry to suit their own interests. In Committee the Parliamentary Under-Secretary of State for Trade and Industry conceded that the television companies had specified, when they offered to help the National Film and Television School, that that offer was conditional upon there being no levy upon the television companies. We are left with the grave suspicion that the further efforts which the television companies are said to be prepared to make to help the film industry have equally been made conditional upon receiving an undertaking from the Government that there will be no levy. It would be most unfortunate if an issue which had been fully debated and decided upon by a Committee of the House were, in a sense, to be taken away from us and made the subject of more or less secret negotiations between the Government and those who were to be subjected to the levy.

Mr. Gorst: Since there has been discussion about unspoken agreements and understandings, it is fairly remarkable that as one casts one eye around the Chamber today one sees, except for the tip of an iceberg on Conservative Benches, no spokesman who is identified with commercial or BBC television, and one has the suspicion that a back-door market arrangement has been made, so that discussion and argument about it in this forum are almost unnecessary. However, perhaps we shall see.

Mr. Gould: As so often, the hon. Gentleman is on the point. I have heard other descriptions of his hon. Friend the Member for Wealden (Sir G. Johnson Smith) than the tip of an iceberg.
It appears that the independent companies feel that they have accomplished their objective and reached an agreement with the Government which satisfies their needs. However, it is important to remind the House of the arguments that carried the day in Committee. As the Minister will recall, they were deployed over four or five hours in Committee, at great length. All the matters to which the Minister referred in his speech were also raised in Committee. After long deliberation, the Committee, by a substantial majority, decided that the levy was an appropriate mechanism to put into the Bill.
Our arguments began where the Government began their arguments, with the impracticability of the Eady levy. Everybody concedes that, whatever its merits, and whatever can be said for its principle, it has outlived its practical life. Therefore, we are left with the problem whether to replace it — in which case we have to look for some other redistributive mechanism—or simply to say that the film industry can manage without a levy. The Committee decided that we should try to replace it and that

the British film industry was not so healthy and thriving as to be able to dispense with what is now an admittedly small sum of money, but which has historically been of considerable importance.
Both sides of the Committee set themselves to work out how to apply the principle of the Eady levy in modern circumstances. The cinema audiences which have melted away, largely because of television, are still watching feature films, but no longer go to the cinemas in large numbers. Instead, they are to be found sitting in front of their television screens. This is not the case of an industry whose product has become outmoded for technological or social reasons. There is still a substantial demand for films. In other words, the principle is still valid. What has gone wrong is that the mechanism whereby consumers of film contribute in a certain way by the payment of a levy on admission to a cinema is no longer practicable.
The problem is simple. If we are concerned about the future of the industry and wish to maintain its financial support, we have to find a way to levy all those who watch the products of the film industry, but this time seated in front of their television screen.

Sir Geoffrey Johnson Smith: Has not another method been found, and one that is working most successfully? That is the agency of Channel 4, which has committed £96 million to feature production. It is true, as the hon. Gentleman and many of my hon. Friends have said, that some of those productions are not films of the sort that would have the same impact on the wide screen as some of the more traditionally made films. Nevertheless, Channel 4 is catering for the needs of the film industry and the products are seen and enjoyed by those who watch films on television. Therefore, it is fulfilling an important obligation to the industry as a whole.

Mr. Gould: I understand the hon. Gentleman's point, and I shall come to that when I examine the case that has been deployed by the independent television companies.
I am surprised that the Minister and Conservative Members, to whom presumably the market mechanism is a matter of some importance and value, do not recognise that with this levy we are seeking to ensure that the market mechanism overcomes the artificial obstacle that has recently arisen. That market mechanism should operate to do what a market should do, which is to reward, through the desires and appetites of the consumer, those who produce the product. That is the simple principle that we are seeking to achieve.
The market mechanism does not work at present because television has intervened, but also because, as the Minister implied by referring to it often in his remarks, the market is not a free market. The purchase of feature films for television is in no sense a free market. The term "duopoly" has often been applied to it, and we are all familiar with the recent example of "Dallas". Most of us would see that episode as demonstrating that the unspoken gentleman's agreement had on this occasion, and perhaps on this occasion uniquely, broken down. This is truly a case of an exception proving the rule. The purchase by Thames Television of "Dallas" caused such a stir and commotion precisely because that unspoken agreement had not been complied with and was, presumably, threatened for the future. That is why Mr.


Brian Walcroft was summoned to the IBA to account for his actions, and that is why various assurances have been given that this will not happen again.
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The consequence of this—and this has been accepted on both sides of the House, as it was in Committee—is that the price paid for films is abysmally low, as my hon. Friend the Member for Islington, South and Finsbury (Mr. Smith) has been instrumental in bringing to light. I understand that the average price is about £7,000 or £8,000 a film. I know that the hon. Member for Wealden will say that there are major exceptions, and I accept that. However, I am talking about a well-authenticated figure of the average price for films.
The independent television companies offer a rather engaging explanation as to why that should be, but such a pitiful price is of little value to those who make the films in the first place, and of still less value to those who will have to continue making films for an almost insatiable market.

Sir Geoffrey Johnson Smith: Will the hon. Gentleman clarify what he has just said, for the benefit of the House? Is he suggesting that the person who made a British movie last year, or not long ago, is, on average, to be paid only about £6,000 or £7,000? I do not understand that to be the situation. If one is making a new, big and important film, there is a great deal of competition to acquire it. The price of $2 million for "Chariots of Fire" has been quoted, as well as $4 million for another movie and $500,000 for "Champions". These are substantial sums.
I suggest that the average that the hon. Gentleman is quoting is for old films, many of which are foreign imports. If he can substantiate his claim that modern British films are fetching only this derisory rate he has made his case, although it does not follow that the levy is the correct way to deal with the matter.

Mr. Gould: The hon. Gentleman should bear in mind that the important factor is the replacement cost — the cost of making films now. The antiquity or otherwise of the films constantly being shown on television is hardly relevant to that simple, economic point.
The fact of the low prices is admitted, in a somewhat engaging way, by the independent television companies. The Minister referred to the remarks of the spokesman for the BBC, who made a similar point. The independent television companies say that the average prices are low because of old material, much of it American, at the bottom end of the market. Many television viewers will say, "Hear, hear" in response to that. Television companies may hope to disarm criticism by the frankness of that admission. However, even old feature films, as the hon. Member for Hendon, North (Mr. Gorst) pointed out, are shown time and again on television, particularly at peak viewing times.
Last Christmas, for the umpteenth time, I saw a film of which I have fond memories from my childhood, and which I thought had passed from public memory for ever until about 10 years ago. I enjoyed the "Wizard of Oz" all over again, but it must have been shown over a dozen times on television over the past few years, and the same can be said of films such as "Chitty Chitty Bang Bang".


These films are shown at peak times to large audiences, and at virtually no cost to the television company. They are popular films, otherwise they would not be scheduled. Some 65 were shown on the four channels over the Christmas period, and in total about 1,500 feature films were shown on television throughout the year.
The argument that these are low-grade films which attract small audiences is very difficult to sustain. Television companies know when they are on to a good thing. Those who made these films, and to whom television and the country generally are now turning for the new generation of feature films, are not, through a distortion of the market mechanism, being paid the normal price for their product. It is to correct that distortion that we supported the amendment in Committee and now oppose the Government's attempt to remove it.
It is also worth making the point that the Committee was not alone in believing that a levy on the television companies was a useful device in this context. We had occasion in Committee to refer to a document which had been produced by six of the industry's leading organisations. They came from all sides of the industry and included the trade unions, the producers and the National Film and Television School. Those organisations do not normally find it easy to reach agreement on a common platform. Their document enabled the Committee to illuminate some of these difficult points. It has now been elaborated, and I am certain that all members of the Committee and many other hon. Members who are interested in the film industry will have seen a copy of it.
Those elements of the industry make it quite clear in their document that they support a levy on the television companies. They looked at some of the practical problems and believe that if they could be overcome a fund of major importance would be provided for revitalising the film industry. In the presence of the hon. Member for Gravesham (Mr. Brinton) it is also worth making the point, which he will no doubt wish to emphasise, that the Select Committee of which he was a member in 1982 also looked at this problem and reached the same conclusion. Therefore, we are not conjuring up some oddball remedy out of thin air. This matter has been looked at by many people with knowledge of the industry. They believe that this would provide a workable remedy for some of its problems.
The industry needs money. It is virtually bereft of any tax incentives as a result of last year's Budget. It receives very little public money. No doubt this matter will be debated when we reach a further group of amendments. The industry has now lost the Eady levy. Although it is now relatively small in value, at the time that the Eady levy was introduced it produced a very substantial sum. Rather than let the industry languish without any form of financial support from any of these sources, we believe that it is important to introduce a levy which we calculate should produce about £10 million per annum.
Practical problems are involved in introducing a levy and the amendment does not seek to resolve them, although it was very instructive that during the course of a few minutes the Minister found how easy it was for his hon. Friends to resolve some of the practical problems that he raised. It was also instructive that the Minister quickly moved off that ground and came back to the point of principle upon which he had taken a stand.
The fact is that the amendment suggests one possible basis upon which this money could be raised—the levy


of a very small sum of money per estimated viewer of feature films on television. I could have understood it if the Minister had come to the House and said, "We have looked at the practical problems and we should prefer to achieve this objective in some other way." I am very disappointed that the Minister did not do so. He said that he wants to strike out the amendment altogether. But there are other possibilities. In an excellent, recently published monograph Robert Hutchinson looked at the problem and made the interesting recommendation that, to achieve a levy of £10 million per annum, a purchase price should be paid by the television companies for feature films. Perhaps that is a simpler calculation.
It may be that the Minister is right. I was tempted to get up and say that we accepted his suggestion of a simple contribution to a public film finance fund of some kind, but my guess is that the Minister did not pursue that idea and that he is unwilling to pursue any other idea for a levy because it would lead to some kind of public film finance body deciding how the money should be distributed. I suspect that ultimately it is an ideological objection: that if this money were raised in such a fashion he would have to provide a public sector mechanism to decide how the money should be distributed. What underlies and animates the Bill is what we believe to be the mistaken view that all these matters can be settled in the market place.
In conclusion, I deal with the defences that have been advanced by the independent television companies, which I assume have written to all those who are interested in these matters. The television companies rightly say—the hon. Member for Wealden has already made this point—that they are already supporting the film industry in a very substantial way, primarily through the mechanism of Channel 4. We agree with that, but it will come as no surprise to the hon. Member for Wealden to learn that in Committee I made a distinction which became very familiar to its members. There is a substantial difference between films made for television and films made for the cinema. I shall not weary the House by rehearsing all the arguments and distinctions that were widely accepted by the Committee. Although the Minister has not done so today, he and some of his hon. Friends were prone to boast of the success of "Gandhi" and "Chariots of Fire" as evidence of the strength and health of the British film industry.

Mr. Norman Lamont: rose—

Mr. Gould: Let me make this point and then the Minister can intervene. I say that he cannot make that boast without at least accepting that there is a distinction to be drawn between films of that character and films which are generally produced by the television companies and shown on Channel 4.

Mr. Lamont: This is a trivial point, but, as the hon. Gentleman has made it repeatedly, perhaps he will give me the opportunity to say that if he can find that I have ever made any reference to "Gandhi" I shall buy him a very good lunch.

Mr. Gould: I am tempted, in the longueurs that lie ahead, to peruse the proceedings of the Committee to find just such a reference. However, it is certainly true that frequent reference was made to it. I see that the Minister's Parliamentary Under-Secretary of State for Trade and

Industry, the hon. Member for Rossendale and Darwen (Mr. Trippier), is immediately confessing to it, in case he is challenged to a similar wager.
The notion that money spent through Channel 4 can in some senses be attributed to film production reached its apotheosis in the remarks of the hon. Member for Rossendale and Darwen at the end of the Second Reading debate. In an attempt to boost artificially the amount of money which the Government and other sources were funnelling into the film industry, the hon. Gentleman cited the £45 million which the independent film companies were paying towards the cost of Channel 4. Even the hon. Gentleman will recognise that this was an overestimate. However, it warns us against not making a distinction between film and television.
The next point which the television companies made was that they already contribute to the National Film and Television School. Of course they do, and they have undertaken to continue to do so, although one is bound to record, as the Minister conceded, that their offer was conditional upon there being no levy. It is also true that in supporting the school the television companies are in many respects pursuing their own interests, since it is a television as well as a film school.
The television companies then argued — some what pathetically, I thought—that this would be very hard on them, since their profits are down. Although the days may have gone when the famous remark of Lord Thomson would be apposite, nevertheless the television companies remain one of the few really profitable aspects of our economy. While there is some evidence that advertising revenue has fallen recently, I believe that if one looks at the trend over a period of years it is very difficult to argue that the independent companies are still not flush with money. Indeed, as the Government themselves recognise, there is an excess profits levy to recognise that fact.
The hon. Member for Wealden and I had an exchange in Committee as to the relationship between the levy that we are discussing and the excess profits levy. I am not competent to go into detail, but the profits of the independent companies would be calculated after that levy had been subtracted. Therefore, their profits would not be in double jeopardy but, rather, one element of their excess profits would be directed not in the general levy to the Treasury but to a special fund to help the film industry on which they so much depend.

Mr. Norman Lamont: The hon. Gentleman is covering many points and posing many questions. I hope that he will answer some of them. The television companies are the master of what they spend on films. How will he ensure that, as they do not want to pay the levy, they will not spend less on films?

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Mr. Gould: Of course the companies do not want to pay a levy. Who would? But if they were to pause for a moment and think about their longer-term interests, they may see a more powerful case for doing so. They are, as we have constantly said, one of the major consumers of film and they have a long-term and obvious interest in ensuring that that supply continues. However, I take the Minister's point. In the short term it is difficult for the independent companies to say that they are so strapped for cash that if they are forced to pay this relatively small sum of money


they will have to make major economies elsewhere, particularly in the realm of buying films. Otherwise, why are they having to pay an excess profits levy?
One may ask, what about the poor old BBC? Would it not be most unfortunate if it was forced to add 30p to its licence fee? I am relatively unmoved by that sort of argument as well. It could be addressed to almost anything that the BBC proposed. Those are matters which have to be decided by the broadcasting authorities. They are under statutory obligations of various sorts to maintain standards. It is up to the Government and other interested bodies to ensure that that is done. None of those arguments should enable them to get on the cheap the products of an industry that is in danger of dying as a result.

Mr. Norman Lamont: The question is not whether they would make major economies, but what is to stop them offsetting the effects of a levy by adjustments on what they spend on films? They know what they want. They know the number of films that they require. What is to stop them offsetting the effect of a levy by adjustments in their budgets?

Mr. Gould: Surely the Minister is not conceding the case that anything other than a free market operates. Surely competition will ensure that if there is a demand for the product the price will be bid up, irrespective of a levy or anything else, to a proper level.

Mr. Paddy Ashdown: Is it not remarkable that the Minister manages to say that the companies would have such control of the market place that they could do that, but that they would not have such control of the market place that they could wind up the price that they would offer for films?

Mr. Gould: The hon. Gentleman is right. The Minister has great difficulty in riding those two horses at once.

Mr. Gorst: There is an extraordinary quirk and a contradiction here. I note from a letter which hon. Members have no doubt received from a man with the fascinating title of "Head of Briefing" that the IBA limits the number of cinema movies that can be included in schedules in the interests of stimulating the maximum amount of original television products. That gentleman with the fascinating title also claims that the levy would be seriously detrimental to the creative development of television. Rather than attempt to force the television industry to subsidise the film industry by law, he says that the future can be seen in terms of—a most extraordinary proposition—increasing creative cross-fertilisation.

Mr. Gould: I am sure that that phrase leaves the hon. Gentleman almost as puzzled as it leaves me.
The Minister has not so far mentioned, as I thought he might have done, that the forthcoming Green Paper on copyright — a well-trailed possibility — might provide a levy on blank tapes of various sorts. I fully understand why the Minister has not raised that point. I think we are all agreed that, for the moment at any rate, that is not relevant to our discussions. However, it is worth making the point that that is a copyright measure and we are talking about a redistributive mechanism. Therefore, as I understand the principle that we are advancing, it is not necessary to find the long-dead maker of a particular film in order to recompense him. Far from it. That would be true if some

sort of copyright principle underlay the proposal, but we are suggesting that that redistributive mechanism should cycle money back to a general fund, which would then be made available generally, and not to particular film makers or producers of films shown on television.
That helps us to dispose of the independent companies' suggestion that this would be an unfair tax on them. It is preferable to regard it as simply a redistributive mechanism within the same industry—an industry which begins with the producers and ends with the consumer watching the film in front of his television set.
My hon. Friends, I believe with some support elsewhere, believe that it is immensely important that the British film industry is not left without a buoyant and reliable source of revenue which, in many respects, the industry itself produces. We are asking only that the Minister should recognise that the market operates so imperfectly as not to provide the producers with that revenue, and we are simply asking him to remedy that deficiency.

Mr. Gale: The amendment tabled in Committee was founded upon two fundamental Conservative principles, although it had the support of Opposition Members. One is that people should be prepared to pay a fair price for what they get—the television companies in this case—and the other is a move towards the ending of restrictive practices.
I have to declare an interest in a company called Shaw Cable, which hopes to take the lead in the cable television industry and the boon that we hope will come in that direction. Therefore, I might be expected to have an interest in the purchase of cheap television. Historically, films on television have been cheap. If I pursue my interest, I should be on the other side of the argument. I am not, because I believe that the future of the British broadcast television industry and the future of the British cable industry depends, at least in part, desirably, on the provision of an adequate supply of British material.
If we allow the British independent film production industry to go under, a major purveyor of British material—films—will have been lost to us. Therefore, it is in the interests of the broadcast television industry and the embryo cable industry to see that Britain's film industry is supported and survives.
Earlier I mentioned restrictive practices. There are two in this industry. There is the restrictive practice of the buying cartel, about which we have heard a certain amount. My hon. Friend the Minister has said that, were the levy to be introduced, the television companies would replace the material that we are discussing with cheap imported material. But, of course, many of the films that we are talking about are exactly that, and they are very cheap television indeed. The availability of such material enables British television companies—both the BBC and the independent companies — not to use home production.
My hon. Friend the Member for Wealden (Sir G. Johnson Smith) said that we are not talking about modern British television films, because they are not cheap. That is absolutely right. They are not cheap, and, in part at least, they are the films that people wish to see. When there is genuine competition for the material, on occasion a fair price is paid for it, but only when there is genuine


competition. It is the joint buying cartel of the Independent Television Companies Association and of the BBC that is stifling that freedom of competition.

Sir Geoffrey Johnson Smith: I quoted the figures incorrectly. It is $500,000 for "Champions" and $2 million for "Chariots of Fire." I should be interested to know what good new British-made movies have been victimised by this so-called cartel, with the consequence that a derisory sum has been paid for them. Where is the evidence?

Mr. Gale: We have heard a great deal about what I would describe as the blockbuster independent, if there is such a thing. "Chariots of Fire" and "Gandhi" are, I think, the only two films in the blockbuster category which have been mentioned throughout this entire discussion.

Sir Geoffrey Johnson Smith: Three—"Champions."

Mr. Gale: If any hon. Member can name a fourth I shall happily give way. [AN HON. MEMBER: "Star Wars."] I believe that "Star Wars" falls into the category of the genuine blockbuster, like the James Bond films and others, and those are not the sort of films that we are discussing this afternoon. We are discussing the small, I hope British, independent productions, which will not fall into the award-winning "Gandhi" and "Chariots of Fire" category, but which can be and often are films of considerable merit. It is those films that the buying cartel has damaged.
There is another restrictive practice — craft union agreements within the independent television companies particularly, but also to some extent within the BBC. The hon. Member for Dagenham (Mr. Gould) and I were both employed—before he returned to this place and I came here for the first time — by Thames Television, which has its own subsidiary, Euston Films. Unlike the hon. Member for Dagenham, I do not discriminate between independent films made for television and independent films made for the cinema. I believe that there is a high degree of interchangeability between them and that the essential quality of a film as opposed to a television production is inherent in both. I therefore support both.
Thames Television has its own film production company. If every independent company and the BBC had their own film production companies, the argument that we are deploying this afternoon would be much weaker, but they have not. It is a fact that in many independent television companies there are closed shop agreements between the union and the management which prevent the commissioning of outside independent productions. If an independent producer or director wishes to make a film for an independent television company, he or she, or they, may he employed individually by that company, but the product will be made by the company, not by an independent producer. That, of course, does not stimulate the British independent film production industry that many hon. Members on both sides of the House seek to stimulate.
My hon. Friend the Minister referred to the element of competition. I suggest that the element of competition is sadly lacking. In seeking to remove, at least in part, the restrictive practices of the buying cartel and of the union closed shop agreements, we are seeking to stimulate the Conservative element of competition.
5.15 pm
The hon. Member for Dagenham said that he was suspicious of any argument which rests on proportion. I

am suspicious of any argument which rests in the main on parliamentary drafting—and, with respect, much of the argument of my hon. Friend the Minister did just that. I dealt with the points that he made against the mode of calculation of fees. I must repeat that that mode of calculation is used for every commercial shown on television to calculate performance fees, repeat fees, the payment of the artists, and, in terms of time of viewing, it is applied to the price charged for the commercial itself. If that formula can be applied to a commercial every time it is shown, either locally or on the independent network, it can just as readily be applied to a feature film.
My hon. Friend the Member for Richmond and Barnes (Mr. Hanley)—who I know will be rejoining us shortly — dealt with the question of what is a film. His argument is unassailable. A film is a piece of material carrying a certificate from the British Board of Film Censors. It is as simple as that.
This clause was carried in Committee by a sizable majority — indeed, an overwhelming majority, when allowances are made for the normal parliamentary conventions. I ask my hon. Friend the Minister, who spoke of principle in his argument, to accept the principles that the Committee sought to insert into the Bill: first, that the television companies — the independent companies and the BBC, which is just as culpable in this respect — should be required to pay a fair price for what they get and show; and, secondly, that in doing so we and they should support the British film industry upon which, at least in part, the future of broadcast and cable television in this country will depend. I urge my hon. Friend to accept the amendment, with any drafting weaknesses in it that exist, and to use the opportunity in another place to correct them, but not to remove this provision from the Bill.

Mr. Ashdown: As hon. Members who served on the Committee will know, I did not have the privilege of serving on the Committee, but I am happy to be here today and to able to take part on Report.
My hon. Friend the Member for Cambridgeshire, North-East (Mr. Freud), who did serve on the Committee, has provided me with a very good background, and I have some ideas of my own. I should like particularly to comment on what the hon. Member for Thanet, North (Mr. Gale) said, because I think he hit the nail on the head. Certainly I believe that it is a shame that the Government should seek to throw out this amendment made in Committee, where it received a lot of support. I must say that, having read the Committee reports, it seemed to me that the Government not only had the voting against them, but, substantially, the arguments as well. It seems to me that this is the very heart of the Bill. It is the clause which is now being brought in that has countered the opposition to this Bill from a very broad section within the industry.
The removal of the Eady levy without an appropriate replacement is nothing less than the removal of the background stability that the industry has enjoyed. I think we can all accept that the Eady levy was an inappropriate mechanism to provide that background stability, but another method could be found. Without that background stability, without what might be called an infrastructure or something to provide a long-term stabilising force for the industry, it seems likely that we shall move towards a situation in which, as the hon. Member for Thanet, North has said, we shall see the demise of the British independent film maker and a shift away from a broad-based film


industry which is capable and successful both in commercial terms and in artistic and rather less commercial terms. The country has a great artistic cinema heritage which has been preserved by the Eady levy and could be preserved in future more effectively by some substitute in a more appropriate form.
Some have suggested that we might have a levy other than the one proposed in the subsection, and the hon. Member for Dagenham (Mr. Gould) commented interestingly on that. For example, it has been suggested that we might have a levy on video tapes. For various reasons, not least those mentioned by the hon. Member for Dagenham, that would be an unwieldy alternative source of finance for the industry.
I also share — it was about the only part of the Minister's speech with which I agreed — the Minister's unhappiness about the unwieldy nature of what is proposed in the subsection. I agree that there are more elegant mechanisms for achieving the aim than to base it entirely on how many bottoms are on seats in front of TV sets. That is an inadequate and perhaps even inaccurate method.
If we are to have a levy, it might be better to impose one based on a percentage of the fee paid to distributors for the distribution of films. The industry would thereby have a real interest in getting the best price for its wares, and a television contribution paid by way of levy based on such a system might be more stable—because the facts would be known in advance—less fluctuating and less dependent on the caprice of the moment, such as the weather or what is showing on other channels.
In the absence of a more preferable system, the advantage of what the subsection proposes to delete—as the hon. Member for Thanet, North said, it could be amended in another place—is that at least it provides a basic structure for future stability. It establishes the idea that to have a good industry we must have a method of financing it. Thus, in the absence of a better system, I shall have to oppose what the Government are aiming to do.
I came to the debate with that view in mind, and my view was enormously reinforced when I heard the Minister's speech. The hon. Gentleman said that he accepted — it is clear from his rhetoric and from the terms of his remarks that he does — the important role that the television companies have to play in providing finance in future.
The Minister may reject the unspoken agreements about which we have heard — although there is enough evidence about them for us to take the matter seriously—but he is a member of a Government who believe in the basic ideology of a free market. He is thrusting the whole of the support mechanism for this important industry right into the hands not of a free market, because he admits that it is not a free market, but of a duopoly. The Government have taken a public monopoly and in the name of free enterprise turned it into a private monopoly. I refer to British Telecom. Here they are thrusting the dependency for a decent system of finance into a market place which is dominated by two parties.
The Minister told the hon. Member for Dagenham that mechanisms would no doubt be found for winding down prices to accommodate the levy which the hon. Member for Dagenham had suggested. Precisely the same, if it is

not already happening, could happen in future. Is that the chosen method of the Minister in expressing a free market philosophy?
The Minister went further. He seemed to prefer — perhaps he was using the old debating trick of trying to destroy the argument by becoming ridiculous — a lump sum paid by television companies to the film industry. Would he really prefer that to a system by which the returns on a film are based on its acceptance by the public?

Mr. Gorst: The Minister is not considering much of a lump sum, either.

Mr. Ashdown: I am sure that he is not, but in seeking to destroy the chosen mechanism in the subsection he is, in effect, saying that he prefers the other way, which seems to be totally contrary—

Mr. Norman Lamont: But more logical.

Mr. Ashdown: More logical perhaps, but I thought that the Minister was a believer in the free market. What does he find difficult about having a levy system based on the number of people who want to watch a film—or a system based on the level of public demand?
Like the hon. Member for Dagenham, I suspect that the weaknesses in the Government's argument betray an ideological commitment against the National Film Finance Corporation. The Government know that if we were to set up a system based on the scheme in the subsection, or perhaps on a somewhat amended system, they would have to return to the NFFC.
At the heart of it all is the old ideological closed mind of the Government. They know that the film industry must be supported, and they recognise the important role that the television companies have to play. Yet they thrust it all into the so-called philosophy of the free market, which in this case is nothing of the sort. There are more effective ways of dealing with the matter.
The removal of the Eady levy without an effective replacement is, as many people in the industry say, a significant blow to the future of the British film industry. I do not say—as others, overstating the case, might say—that it is the end. However, it could be the beginning of the end of a sector of the British film industry. It could be the beginning of the end of a British film industry that is renowned not just for its popularity and commercial success, but for the range, the plurality, of its films and for their artistic merit.
For those reasons, and without necessarily agreeing with every detail of the subsection, I shall vote against the Government in this matter.

Mr. Brinton: The old style Eady levy, the passing of which the hon. Member for Yeovil (Mr. Ashdown) regrets, has received little support during the passage of the Bill. It was astonishing in Committee that the whole of the British film industry was united in saying that the old Eady levy should be updated and that changes were necessary.

Mr. Ashdown: I must have expressed myself more inadequately than I thought. I did not mean to suggest that the Eady levy should be continued. I said that it needed to be updated, but that the system of providing structural support for the industry was important, albeit that we should find other measures for providing that support.

Mr. Brinton: In that case, the hon. Gentleman and I are united in our objective.
I should at the outset mention my potential or actual interests in the subject. I am an adviser to a public relations company called Communications Strategy; I advise the British Videogram Association; I am a director of a company called Airtime (Publicity) News Flash Ltd; and I am a member of the ACTT, the technicians union, and of Actors Equity Association.
A difficulty in discussing the question of how we support the British film industry is that almost everybody speaks subjectively. When I say that the British Videogram Association, which I try to advise, is dead against putting a levy on the showing of films on television, whereas I am for a levy, hon. Members will see that possibly there are problems between us, albeit on a debating scale. One's view on this whole question depends on which side of the fence one sits, and possibly the only place where we can hope to look at the problem with any objectivity is in this House.
The Minister delighted me by admitting, contrary to beliefs in the BBC and ITV, that a great change to the duopoly was on the way. We would be having cable and satellites and so on, he seemed to say. When I was broadcasting with the chairman of the BBC last Sunday week, he told me that cable was a dead duck. If the Minister is right and the duopoly really is falling to bits, there is possibly less of a case for what has been proposed, though many — particularly those who are subjectively interested in retaining the duopoly — say that the duopoly is sticking. Therefore, the unfair competition in buying films will presumably continue in its present form.
5.30 pm
In supporting the idea of a levy for the showing of feature films on television I wish to see a continuing and, I hope, thriving British feature film production industry. The Bill is providing for the bottom end of the industry in creating the son of NFFC, which, given a helpful wind and a fair start, will do much good for smaller budget films. It will be able to contribute £200,000, for example, to stoke them up. That is the scale of the budget of Channel 4 films and that is why Channel 4, to its credit, has become involved, as has the British Videogram Association. That is the proposed scale of operation of the son of NFFC.
My difficulty is that that is only part of the British film industry. I look to some way of keeping a thriving industry that produces feature films with a budget of between £2 million and £7 million. I am not talking about the great blockbusters with considerably larger budgets. I often compare today's medium budget films with those which were produced in the 1950s with budgets of about £200,000 or £300,000. I am old enough to remember those films. There are those who tell me that films such as "The Blue Lamp"—

Mr. Hanley: Hear, hear.

Mr. Brinton: I agree entirely with my hon. Friend's backing.
It is said by some that such films do not portray acceptable techniques these days, but the issue is not one of technique. The same amount of care is lavished on producing that scale of cinema with modern techniques as opposed to film for television, plays for television which are produced on film and minifilms to be shown in arts cinemas. That is what the son of NFFC can and will do successfully, and all credit to it. However, that must be backed with some funding for medium-sized feature films.
There is an alternative to asking the television companies and the BBC to pay a levy, but it is one that the Treasury would dislike intensely. The alternative is to ask the BBC and ITV companies to make feature films, to fund them properly on the scale of which I am talking and to give them suitable fiscal relief for doing so. That would be a way of encouraging the industry. Such a system would let ITV companies off the big levy which is paid on television profits. Advantages of a commensurate nature could be found for the BBC. My conversations with those in the relevant organisations lead me to believe that there would be a keenness to produce the sort of feature films of which I am talking.
If nothing else, I hope that I am reasonably practical in my thoughts. I know that the alternative to the levy system would not be acceptable to the Government. That being so, I must look around to ascertain who best can finance the level of funding for British films that I have in mind.
I am driven to the conclusion that we must channel funds back to those who will produce the feature films from the consumer or customer as directly as we can. The hon. Member for Yeovil said that he did not like the idea of measuring the amount to be paid by the number of bottoms on seats. The virtue of the old Eady system was that the film fan paid for a ticket and, as he could be identified as a film fan, he made a contribution to the future of British films. That was the principle behind the levy. The nearest that we can get to that in terms of electronic transmission is to try to measure the size of the audience and to base the alternative funding system on the results obtained.
The amendment which was made in Committee set down a principle that can be altered easily. As my hon. Friend the Member for Thanet, North (Mr. Gale) said, mechanisms are available that could make the necessary calculations with great ease, or I am sure that a percentage could be calculated. It must be remembered that the audience for the sort of feature film that I am discussing is currently with television, not with the cinema. Even more threatening is the fact that in a few years television will run out of British films with budgets of between £2 million and £7 million if we do not do something now.
My hon. Friend the Minister of State, who has been constructive and helpful throughout our proceedings since Second Reading, asserted with great vehemence that he wanted to support the British film industry. If we do not get a commitment of the sort of which the amendment is a prime and constructive example, my hon. Friend will not be able to fulfil his commitment. That is why I shall vote against the amendment that seeks to remove the provision which was inserted in the Bill in Committee.

Mr. Chris Smith: I oppose the Government's attempt to remove from the Bill the principle that was inserted in it in Committee. As we are in the business of declaring our interests, I shall tell the House that throughout our discussions I have received considerable research assistance and support from the Association of Cinematograph, Television and Allied Technicians, of which the hon. Member for Gravesham (Mr. Brinton) is a member.
The Minister said that he wanted to base his argument primarily on points of principle rather than on practicality. The thinness of his practical arguments demonstrated the wisdom of that statement. I shall address myself to what seem to be the two major points of principle.

Mr. Norman Lamont: The hon. Gentleman talks of the thinness of my practical arguments. I do not want to sound too stunned by that accusation. I was merely saying that there are many unanswered questions which are not addressed, even remotely, by the amendment. Those questions can be addressed in various ways, but no one has tried even remotely to do so.

Mr. Smith: The Minister has elegantly extracted himself from the specific hole that I dug for him. However, there are unanswered questions on practicality and some of them have been mentioned by my hon. Friends. There should be no real difficulty in answering the remaining questions in practical terms.
I wish to address myself to what seem to be the two fundamental points of principle which led some of us to support the amendment which was agreed to in Committee and which cause me to defend it now.
The first point of principle is that the Government, in abolishing the Eady levy—they were right to do so as it was outdated — have not put in its place sufficient support and funding for the future development of the film industry. They have not created the necessary mechanism and they have not provided the funds to do so.
There were a number of discussions in Committee about the money that would be available under the new mechanism proposed by the Government to provide for the production of the sort of British films that the hon. Member for Gravesham has mentioned. We have read the Government's proposals in the White Paper and the Bill and discussed them on Second Reading and in Committee. The Minister has informed us of the proposed arrangements which have been drawn up for the body that will succeed the NFFC. Unfortunately, the money that will be made available will not be sufficient to do the job properly and ensure that British film making can continue.
We need look only at the contact made early in Committee by the ACTT with a series of financial institutions. The association discussed with financial institutions, film companies and banks what would be needed to encourage private commercial funding to go into new British film making. Each of those institutions replied that the types of funding that the Government outlined in the White Paper were insufficient to enable them to take the risks involved in setting up new film-making enterprises. That clear example shows why I believe the Government have been wrong in terms of the amount of funding they are prepared to put in as seed money for the promotion of commercial private film making.

Sir Geoffrey Johnson Smith: Although I expressed in Committee—I shall do so again if I catch Mr. Deputy Speaker's eye — a view not dissimilar to the hon. Gentleman's, I do not believe that his is the final answer. What figure does the hon. Gentleman have in mind? I am sure he has devoted a great deal of time to this aspect.

Mr. Smith: As a bare minimum, I would go for the £10 million mentioned on a number of occasions in Committee. If I were in charge of making the arrangements, however, I would probably wish to double that figure. Given the financial stringency that seems to operate in Government circles these days, I would say that £10 million is a basic minimum. We are nowhere near that figure in terms of what the Government are prepared to accept for any future funding provided by the son of NFFC.
There is another major difference in principle between the two sides of the House. I would like a national film authority to be established. That body would be in charge of distributing the money, and ensuring that it goes to the right places and creates the right initiatives. However, we shall have an organisation totally dominated by the people involved in the distributive industries. We have debated that point at great length, and it is not worth pursuing it further at this stage.
The amont of money that will be available is inadequate, and that is the first important point of principle. Establishing the levy—which we attempted to do in Committee and are attempting to preserve now—is one mechanism by which we ensure that money is available for injection into the future growth of British films.
The second important point of principle then comes into play. If one simply says that the amount of money is what is at stake, one could go for crude, rash donations from the television companies or for a levy on blank tapes. Both would be acceptable. The second important point of principle comes into play when we discuss a levy on films shown on television. I believe that there should be a return to the film makers for the artistry, talent and effort that go into making and producing films. At present, there is an insufficient return from films shown on television for the initiative, talent and effort that goes into making them.
Hon. Members have mentioned the low prices which, with some individual exceptions, are paid for the great majority of films shown on television. During 1983 television showed 1,500 films, and there were 4,000 million individual viewings of those films. That compares with 66 million cinema admissions. There is an enormous difference between the number of times a film is viewed by people watching television and the number of times it is viewed by people at the cinema. The price paid for those films when shown on television is, on average, extremely low. The return that goes to the people who put the imagination and talent into making the film in the first place is extremely low when the film is shown on television and far lower when it is shown in the cinema. Some tribute should be paid by television to the film industry for the provision of so much of this material in so many film viewings.

Mr. Tom Clarke: I support my hon. Friend's argument. Does he agree that television and the wider public are responsible for training? Although we welcome the level of skill in the British film industry, there can be no guarantee that that will continue if we are not prepared to reinvest and make training a major priority.

Mr. Smith: As always, my hon. Friend is correct. The money raised by the levy could and should be used in support of the National Film and Television School. I hope that we shall discuss that aspect later.
As my hon. Friend the Member for Dagenham (Mr. Gould) pointed out, the replacement of films for viewing is extremely important, and the Government's proposals do not provide sufficiently for that aspect.
Because of the inadequate amount of money that is available and because tributes should be paid to the makers of films by television for using the products of the film industry, it is extremely important that we should reject the Government's attempt to remove this provision from the Bill.

Mr. Hanley: Many said on Second Reading and in Standing Committee that I should declare an interest in the Bill. If having a father, mother, sister and many of my family friends and constituents — perhaps more constituents than most hon. Members—totally absorbed in the film industry is a reason to declare an interest, I declare that interest. It is not a financial interest. If a deep commitment to the film industry throughout one's life is a reason to declare an interest, I declare that interest. I am interested not in helping the survival of the film industry—it will survive whatever the Bill or the future produce because of the gifts and imagination of those within the industry—but in helping to maximise the return that can be made through the talent within the film industry. That is my greatest interest, and it is in the national interest.
I have previously voted for the amendment on which the House will vote later today, because the Bill deals with the making and financing of films. Films can be made only if one has the money necessary to make them. With more money, one makes not necessarily better films but a range of films, and that will mean the production of the best films that the industry can make. If the film industry has just enough funds, it does not risk its money. It does not try out the exciting and the new—rather it tries out the old, tried and true. The "tried and true" did not create the best films in our British film history. Many of the films mentioned in Committee and on Second Reading were not expected to make a lot of money, but they did. Those films gripped the imagination not just of British audiences but of world audiences. They were not made to earn Oscars. They were made as a result of the integrity and skill of those who made them and their confidence in their integrity and skill. They had the financing, but only just.
To be fair, the Bill shows the Government's commitment to the film industry. It shows that the Government give their wholehearted approval to the industry and to the brilliant, cultural contribution that it has made not just to the whole range of entertainment but to the spreading of the name of Britain and the British way of life throughout the world for the past 50 years.
I am pleased with the interest that my hon. Friend the Minister has shown in the film industry. The Bill has been a learning experience for him and he is enriched by it. The trouble is that the Bill gives wholehearted approval to the film industry but it then says, "O.K. lads, it's up to you. We will give you a little start and now off you go." It is a waste of an opportunity and of the excellence of technicians, authors, producers and directors. I do not regard it as anything to be proud of. The trouble with the wholehearted approval that the Government have given by setting up the NFFC is that they have produced a firm foundation, but they have not delivered the plans and financing nor, as far as I can see, do they have any great confidence in the future of the film industry.
The Bill is a modest start to a new era. I should have preferred the Government to have found a more enriching start to that new era. I was not looking for more money from the Government. The Government have the opportunity within the Bill—the amendment created that opportunity — to help to redress some of the unfair balances in the film industry.
I pay tribute to the NFFC's four partners. The name of Rank is synonymous with film and film making over the years. The man with the gong is probably better known than any other symbol within the film industry. Channel 4 is a new type of film maker and with its tremendous

vision, imagination — it is exciting and experimental — entrepreneurial skills and proven successes it has made a unique contribution. We should remember that that contribution is also a contribution by all the other ITV companies to which I pay tribute. The £100 million that goes to create Channel 4 comes straight out of the production budgets of the other ITV companies. There is a partnership within ITV to support the new "son of NFFC".
The Bill is about films and film making, but we must also consider viewing habits. That point has been made by many hon. Members today. If we are to provide the finance that I crave, we must provide it in the fairest way. That is the nub of the amendment and the reason why it was tabled. Films are watched in the cinema, on television, and on video by pre-recorded cassettes. Cassettes are used for recording and time-shifting existing television programmes. There will be cable and, no doubt, DBS.
The Bill, however, is not the films-made-for-television Bill; it is the films-made-for-cinema Bill. We must always remember that cinema films make an important contribution to television. There is also a little of the films-made-for-television-that-are-shown-in-the-cinema Bill about it. We must remember how films are priced when they are bought for television. They achieve their price because they are still popular in the cinema, and because there is a demand to see films as soon as possible. Thank goodness, the cinema is the only way to do that.
The Bill provides an opportunity to ensure that those who see the films pay for them. Those who watch and benefit from the films pay nothing like a fair price at the moment. The price paid by the BBC and ITV companies is not fair. As my hon. Friend the Minister said, the duopoly has been against the interests of the film industry. I do not go so far as to say that it has been exploitation, as some of my hon. Friends do.
Even my hon. Friends who are connected with the television industry will admit that they try to pay the lowest possible prices for the films that they put on television and that films shown on television are the cheapest possible television created today. There is no cheaper way of filling out TV schedules than to put on a feature film. There is no more expensive product to make than the feature film.

Sir Geoffrey Johnson Smith: There probably are cheaper ways—re-runs of "I Love Lucy", for example.

Mr. Hanley: Re-runs of former television programmes are cheaper, but it was not cheap to make those programmes in the first place. The point I am making is that it is not cheap to make films. There is a bigger difference between the cost of making a film and using it on television than anything I know.
The history of the world's economy over the past 200 years has shown that we have been taking away from those who create, make and dig and giving to those who exploit resources. We must make the world economy fairer.

Mr. Chris Smith: That is Socialism.

Mr. Hanley: That is not Socialism. Even Conservative Members recognise that a fair price must be paid for commodities. There is a level beyond which there is exploitation. I do not believe that one quarter of a penny per viewer per film is too great an expense. If that were


the level of the levy, it would raise £10 million. It would still only increase a licence of £46 or £65 by 30p. It is difficult to split a levy as with, for example, lending rights to authors, but the principle is more important than the distribution. If the BBC had to pay 30p of its £65 to the film makers to help create films, it would be worth it.
A levy of £1 on each blank or pre-recorded cassette would raise £20 million. The Government are not trying to provide the money. They are trying to set a scene where a fair return for those who make the films can be constructed. The public would not carp at 30p of the licence fee going to help create a better, bigger and brighter future for the film industry. I am sure that we shall return to the argument about a levy on videotapes, but it is not germane to the Bill.
My hon. Friend the Minister said that we were not addressing ourselves to the point, which was whether the BBC and the ITV companies would buy fewer films. I do not believe that they would. They would merely have to pay for the pleasure that they are giving their audiences, and the business that they are giving to their advertisers. They would be giving a fair return to those who produce the films. They might be more selective about the films that they buy. Many films are, with respect, rubbish. I do not believe that every film made, even by the British film industry, is good. If television companies had to be more selective, the talented people who make films would benefit.
The amendment is the fairest way to create a satisfactory financial framework for the film producer and the industry. The BBC could do a great deal. It could sell its dead time between 2 o'clock and 6 o'clock in the morning to independent film producers. They would leap at the chance of showing their films and having a shop window at that time. That would raise revenue. In return, I believe that the television companies should produce the funding to keep a great industry going.
6 pm
Four Conservative hon. Members initially supported the amendment. We have worked very hard on the Bill. There was total attendance from the four of us and, indeed, from the vast majority of members of the Standing Committee. We have devoted to the Bill much more time than I believe any hon. Member can afford to give, in these days of difficult modern politics when we are subject to so many disparate pressures. I do not believe that any of the four of us has in any way moved his position. Indeed, after the discussions I believe that we have been entrenched in our positions.
I am not attacking television or the television companies. We are all grateful for their support for the industry. We merely believe that that support must be paid for fairly. We hoped that the Bill would provide a medium through which that could be done.

Mr. Frank Haynes: It was a great disappointment to me not to be asked to serve on the Committee on the Bill. I had participated in the Second Reading debate. However, it was one of those things. I was appointed to the Committee that was considering the fluoridation of the water supply. They tell me that fluoridation will improve the teeth and therefore the looks

not only of children but of all of us. People will have a good set of choppers when they go before the film cameras.
It is a tragedy that we are debating a Films Bill that is worded in this way and doing what it is supposed to do for the British film industry. Many hon. Members are interested in the film industry. I know that on the Government Benches, in particular, there are a number of hon. Members who have had a fair amount to do with the industry.
On Second Reading I commented on the debonair manner of Ministers. The hon. Member for Richmond and Barnes (Mr. Hanley) suggested that the Ministers found the Committee stage of the Bill a real education. If education—at least about film making—is added to the Ministers' debonair manner, we may see some different faces at the Department of Trade and Industry. The present Ministers may go on to better things. One never knows.
I must admit that I have not agreed with the arguments put forward by either side of the House. The Government are wallowing about all over the place. They do not know where they are going—and not only with the Films Bill. The nation, like the British film industry, is going down and down. It is high time that the Government woke up. They were told on Second Reading, they were probably told in Committee and I am telling them now that they are not improving the situation at all. I am suspicious of the easy way out that is being taken by the Government.
I agreed with one of the points made by the hon. Member for Gravesham (Mr. Brinton). If the Government intended to live up to their responsibilities, not only to industry in general but to the film industry in particular, they should have picked up the idea of some sort of relief to be offered by the Treasury. On Second Reading, the Minister wept buckets of tears over the situation of the film industry and said that the Government wanted to help. One way in which they could help would be by arranging some Treasury relief.
On the question of the television companies and the levy, I can assure my hon. Friend the Member for Dagenham (Mr. Gould) that he need have no fears about me. He will find me in the right place. However, I do not agree with either of the suggestions that have been made. We have heard that the television companies may buy older films in order to keep costs down. Although I do not agree with the Minister in general, I agreed with one point that he made. If there is a levy on a film made only two or three years ago, it will be much cheaper for the television company to choose an older film. I am afraid that the levy will drive the television companies away. We all know the saying about biting the hand that feeds. I believe that that saying is applicable here. The television companies will be driven away from buying new films.
There are about 10 million pensioners in our nation. I am not one of them.

Mr. Robert Key: Go on.

Mr. Haynes: Perhaps the hon. Gentleman is unaware that there are nearly 10 million pensioners in our country. His comment shows that he is in the dark.
I remember the time when the hon. Member for Gravesham used to read the news. I remember the period when films were made more cheaply than they are now. Today, costs are massive. I must declare my interest. No, I am not a member of Equity. I have not been to


Hollywood. I am certainly ugly enough for a horror film—but let that pass. I am a member of the films group in the House, and I am proud to be a member. I try to carry out my responsibilities in that connection. I am sorry that I am not wearing my studio tie today. I have visited a number of British film studios. When one talks to people who work in the industry, one really gets the message about how the industry has gone down and down. Many studios have had to close.
The country's 10 million pensioners look forward to films such as the beautiful film that I saw on television on Sunday night. It was a Warner Brothers film starring Bogart and Cagney. On the previous Sunday there was a real masterpiece — "Show Boat". I listened to Paul Robeson singing "O1' Man River" in his rich bass voice. That film was made in 1936. I am old enough to remember it but I wanted to see it again. Such films are catching on on television. The hon. Member for Hendon, North (Mr. Gorst) mentioned the Bond films and others like them. There is no doubt that many youngsters are interested in such films, but those who are retired or approaching retirement are more interested in older films.
Television companies will be encouraged to show such films if we do what the Government suggest. Well, they are not suggesting a great deal — they are wallowing about and trying to get someone to dig them out, as per usual. I do not favour either of the suggestions that have been made, but would prefer the Treasury to make a contribution if the Government are genuinely interested in the British film industry.

Sir Geoffrey Johnson Smith: I agree with the hon. Member for Ashfield (Mr. Haynes) that nostalgia for first-class movies made in the 1930s, 1940s and 1950s is growing. They are quite cheap and the hon. Gentleman might be right in saying that television companies will find them more attractive if a levy is imposed.
I should like to outline why the Government should be supported—they have not enjoyed much support today. No hon. Member has proved by using facts and figures that the proposed levy on television companies is fair to those companies. Nor has anyone shown that the price that television companies pay to show British films is unfair. I have quoted the prices that have been paid for contemporary British productions of quality, and nobody has shouted me down.

Mr. Hanley: When television companies bid for films that they want to show, is there a straightforward auction between the two companies or do they agree in advance which shall make a bid?

Sir Geoffrey Johnson Smith: Hon. Members have suggested that there is not a fair competitive process but that there is a cartel. It is some cartel that fetches up $4 million for "Star Wars", $2 million for "Chariots of Fire" and $500,000 for "Champions". People in the business suggest that competition works, and I have no evidence to show that it does not. My hon. Friend the Member for Thanet, North (Mr. Gale) said that the price paid for small budget productions is too low in relation to the talents and costs of such productions. I wonder which films he was referring to. Are they the types of film that some hon. Members suggest are produced for the real cinema, or are they those which are produced for television and which are criticised by my hon. Friends who support the levy? If we are considering films that will be seen by most people on


television, the Government have made a case, as has the industry. As a result of the establishment of Channel 4, there has been a massive increase in financial support for the British film industry.

Mr. Gorst: Does my hon. Friend agree that he is arguing that when television companies go shopping at Fortnum and Mason they pay a high price but that they never pay a high price when they go to the real market, which is the high street? Does he agree that most of what they buy is bought at ridiculous prices and that they only occasionally shop at Fortnum and Mason?

Sir Geoffrey Johnson Smith: Such charges are made, but they have not been substantiated. It is argued that television companies pay a high price at Fortnum and Mason, but do not in the high street. What sort of argument is that? That is one reason why television companies go to the market. There is competition there for many low budget movies. There are so many of them around that they do not fetch as high a price as others such as "Gandhi".

Mr. Gale: May I suggest that the difference is not between Fortnum and Mason and the high street but between the high street and the pawn shop? Does my hon. Friend agree that it is the desperation of the pawn shop that forces producers to sell at pawn shop prices to the ITCA and the BBC? My hon. Friend said that he had heard no argument that controverted his. The reason for that is that, until fairly recently, right hon. and hon. Members were in Committee upstairs, where such arguments were spelt out clearly. Perhaps I might put it on the record here that films shown on television costing £60,000 or £120,000 an hour represent cheap television.

Sir Geoffrey Johnson Smith: Many television productions are very cheap and many people who want to get into the cable television business will want to show many old television productions which are probably even cheaper than old films. That is how the market works. Hon. Members are trying to work against the market. They are pleading that people who have worked in the movies in Britain or the United States — most of the cheaper movies are American — are somehow being exploited when, 20 years later, their film is seen by millions of people on television. People involved in films cannot expect the high prices that were paid when the film was made to be repeated 20 years later. That does not apply to the products of any other business.

Mr. Gould: As I understand it, the hon. Gentleman's bald point is that we are wrong to say that television companies are paying low prices for films. Does he agree that the examples of high prices that he gave do not relate to the majority of the 1,500 films that are shown on television each year? Does he agree that those low prices militate against the very in-house film production of which he is so proud?

Sir Geoffrey Johnson Smith: I do not agree that the low prices militate against film production. Old movies are bound to command a low price because there are many of them and there is no reason why television companies should pay a high price any more than someone should pay a high price for a pair of second-hand shoes. Films go downmarket and even classic films cannot be expected to command a premium price year in, year out. To do that


would be to exploit the consumer. Television companies — the consumers — are not prepared to go along with that. There are plenty of opportunities for the film industry to recoup its investment if it goes about distribution correctly. Sensible distribution involves doing away with the ridiculous restictive practices of the past, such as the barring of movies from second-run cinemas and from television until they are tired out and a lot of interest has been lost. There are certain modifications belatedly being made to improve the system so that the revenue for film producers can be increased. Obviously there are bargains to be had, but they do not arise from cartels. Anyone in the British film industry can get a high price for a new prestigious production, commensurate with the talents that went into such a movie.
The film industry has had to come to terms with the fact that the cinema has been in decline. If we think that the answer to the cinema in decline is to pump more money into the production end, we shall not solve the problem. We shall merely create some jobs for people to make more expensive movies, which will be seen by decreasing numbers of people in the cinema. I do not know of any other countries that are dealing with the problem of a decline in film production, which are seriously contemplating following the road that the Government have been invited to take. On the contrary — I do not wish to be drawn too far into this because it is a point for Third Reading — they realise the growing interconnection between distribution, different forms of production, exhibition and what the film industry is there for. France, for example, recognises that there is no dichotomy between the film industry that makes commercial films and the film industry that makes arts films. It recognises that this is also an art industry. France has a much more mature, more sensible and, in the end, more viable route to restore the strength of the French movie industry.

Mr. Gould: Since the hon. Gentleman cites the French example, he will wish to concede that the French recognise the principle of redistribution. It just so happens that their cinema attendances have held up better than ours.

Sir Geoffrey Johnson Smith: French audiences have held up for other reasons. [HON. MEMBERS: "Television."] It is not because of payment by television at all. In so far as television supports French movies, I agree. It is not through financial efforts that it is because it is appallingly bad compared with our own industry.
All hon. Members agree that the film industry needs an injection of investment, not just for production but to cover the whole spectrum that I have mentioned. It is totally unfair to suggest as a short-term measure because we do not think that the Government have it right—they have not got it completely right and I do not know what other proposals they intend to make if the film industry is to be put in a more viable state—that we should impose the burden on the television industry. The distinction between film making and television making is gradually becoming blurred. To boot, the television industry contributes an ever-growing proportion of its revenue to the film industry. It is a generous contribution. Some hon. Members present served on the Committee which helped to create Channel 4. We hoped that it would be a success and that it would not cater purely for minorities but would

have a strong sense of commercial responsibility. That is shown by its contribution, talent, inventiveness and cash in support of the British film industry.
It is not worthy of the House to suggest that an industry that is contributing nearly £100 million to the British movie industry should be condemned because about 50 per cent. of the productions are more suitable for television. People want to view films on television. It is no use suggesting that they should not be allowed to because they should see them in the cinema, unless something is done about their exhibition.
On those grounds, the support that the television industry has given to the movie industry should lead us to believe that it would be wrong to impose additional burdens on it, which might have the reverse effect from that which we expect.
Hon. Members must recognise that, whatever the profitability of television companies, they face difficult problems. The audience is to be fragmented through the development of cable and direct broadcasting by satellite. The BBC, public and private sector television are being asked to finance the satellite, which we all hope will be a British satellite, in the latter half of this decade. That is a formidable bill to face. It will give even greater opportunities for distribution of British films, which is what they want.
I could pump £100 million into the British film industry, as has been suggested, but to some extent it would go down the drain commercially. No British film industry has proved viable on its own because the home market is not large enough. It was thought that Alex Korda, the brilliant producer of "The Private Lives of Henry VIII", had found the key to that. We still persist in believing the myth that if we produce a good British movie we can make the British movie industry viable, but we cannot because it depends on American distribution. That is one reason why the British movie industry often comes a cropper or has false dawns because it has momentary success in America and then crumples again. That is why we must consider the matter from a wider point of view.
Apart from the inelegance of the proposed solution, it is not only unfair but counter-productive. I agree with the guidance given by the Independent Broadcasting Authority. It said:
The health of Channel 4 and the independence depends largely upon the well-being of Independent Television. We can see no justification therefore for an additional mechanism which will simply rob Peter to pay Paul.
That is a fair and correct approach. If at some future date — and we shall need to reconsider the industry's position — hon. Members would like to suggest to the Government that their responsibilities do not end with this Bill, I would follow them into the Lobby. But I shall not vote with them tonight.

Mr. Gorst: If I had not just listened to my hon. Friend the Member for Wealden (Sir G. Johnson Smith), I would have said that our debate had been of an all-party nature. Apart from the odd party political fact that emerged, I have not disagreed with anything that has been said from either side of the House, with the exception of the remarks of my hon. Friend the Minister. However, I wish to acquit him of the suggestion which has been made that he has principled objections to this part of the Bill. I also wish to acquit him of any suggestion that he has allowed dogma to masquerade as principle or prejudice. The fact is that he has no practical objections to this part of the Bill. He


does not see insurmountable difficulties, and has only been voicing unresolved problems, which could easily be dealt with by his civil servants were there a will to do so.
The debate, therefore, is between the two sides of the House and two tips of a television iceberg. One surfaces intermittently in our proceedings with a sad sigh or a selective statistic, and the other is the Minister. At the end of the debate the Government will undoubtedly use their unspoken weapon—a Whipped vote—to get their way. For the time being we must accept any such verdict, if that is the way in which the Minister concludes our proceedings, but I hope that the other place will note our arguments and exercise its independent judgment on those arguments, without fear of the consequences of which we who must obey a different system must take cognisance.
6.30 pm
I do not wish to rehearse all the arguments that have been advanced this afternoon, nor any that I voiced in Committee, because that would be tedious repetition. But one point that calls for more comment is whether the prices paid by ITV and the BBC for showing films on television are fair. My hon. Friend the Minister seemed to be arguing that low prices for old films were fair, but I am not attracted by that argument, and I hope that hon. Members are not attracted by it. If we go along that path, it is difficult to see how we cannot say that old books, gramophone records, plays, ballets and operas should also receive reduced payments. No one would wish to argue along those lines, not even my hon. Friend the Minister. What should influence the price of those films is the demand for them. I am sure my hon. Friend will agree that the television companies should pay a different price for films for which there is a demand than for films for which there is no demand.
I wish to take up the point made by that quaint character, the head of briefing of the IBA, that the levy will harm television. I ask my hon. Friend the Minister to remember that if ITV can afford to pay a levy to the Treasury, it can afford to pay a levy to the film industry, especially if the Treasury would be so kind as to remove the obligation to pay its levy. The Treasury takes far more in its levy than would have to be paid willingly by consumers for the opportunity of watching films on television.
I end with a hypothetical suggestion to those two tips of the iceberg to whom I referred. Let us suppose that all films were available to the television audience only through the medium of pay television and that the competition from ITV and the BBC did not contain any cinema films. Do my hon. Friend the Member for Wealden and those who think like him believe that the amount of money collected by a pay television channel, with a similar penetration of the nation, would be less than, the same as, or more than is paid in aggregate by the BBC and ITV? If they maintain that it would be the same, they live in a dream world. If they believe that it would be more, they must concede our case and accept the levy so that fairness can operate.

Sir Geoffrey Johnson Smith: rose—

Mr. Gorst: I see that my hon. Friend wishes to challenge me.

Sir Geoffrey Johnson Smith: I know better than to do that, because we wish to draw this debate to a conclusion.

From what my hon. Friend says, I assume that he is in favour of pay television. I also favour it, and one reason why I object to the proposal of my hon. Friend is that he supports a levy on British television companies and, in addition, he supports pay television, which will fragment the audience of the companies, which rely on advertising. He cannot have it both ways.

Mr. Gorst: My hon. Friend, with his usual charm, wishes to draw me away from the substance of my argument, which is that if the audience could show what it wished to pay for, the answer would be different from that given by him and by the Minister.
Remorselessly, I come to the conclusion that if the Government will not concede the retention of this provision, gently, stealthily and gradually they will ease the cinema side of the film industry into an unsung burial ground. That will be a great tragedy for Britain.

Mr. Key: We have had a long debate, and I suspect that I am at the bottom of the pecking order, but that does not mean that my speech will leave any important stones unturned.
I hope that the hon. Member for Ashfield (Mr. Haynes) was not offended by my lighthearted intervention in his speech. I was paying him a double compliment, first, because I know only too well that he has a long time to go before he receives his pension, and, secondly, because I meant it literally when I told him to, "Go on." He was proving the point that I wished to make, because he was one of the first hon. Members to refer to the consumer of the product about whose creation we are talking.
I was nearly persuaded by the eloquent speech of my hon. Friend the Member for Richmond and Barnes (Mr. Hanley) to vote for his argument. However, despite his eloquence and the fact that it is always a pleasure to follow my hon. Friend, he will not succeed. My hon. Friend the Member for Wealden (Sir G. Johnson Smith) said that people wished to watch films on television instead of going to cinemas. I doubt that. When we seal the fate of this clause, and later that of the Bill, we may have convinced ourselves that we are collectively right, but we shall then have to try to convince the consumers of the product that we are right.
I speak with some diffidence, because some hon. Members who have spoken have great experience of the film industry. In Committee and today there has been much lobbying from all sides of the industry, which have been working closely together, but the consumer has had somewhat less say. In the borrowed words of the Minister, we must demonstrate that the consequences of the Bill will be beneficial. Incidentally, I congratulate the Minister on guiding us through the Bill. Popular though it may be to blame the Government for everything, the blame for this point must be placed elsewhere.
We are in danger of too many people having it both ways. It is clear that much of the discussion has been carried on as though there was a free market in films. There is not. The Minister taunted us a little by suggesting that everything will be all right because the cable and satellite television revolution is just round the corner. I must immediately declare an interest as a shareholder in a small company called Salisbury Cablevision, which has been knocked off the bottom rung of the ladder to somewhere below the bottom rung by the Government's actions in respect of the fledgling cable industry.
We cannot say that the proportion of films on television is becoming smaller, so a levy would be counterproductive, but at the same time say that cinema audiences are now sitting in front of their television screens, so Britain, almost alone in the world, will do nothing to encourage cinema-going. Those arguments must be exclusive to each other.
There is no free market in the industry and, furthermore, Britain is not an island. The impact of British experience in the international film industry is well known. Only recently I discovered that British citizens are working in every section of the production of Roman Polanski's new epic "Pirates". There are British actors in main and secondary roles, British technicians are doing all the special effects, there are British costume designers, and the pirates' galleon will sail with British masts, sails and riggings, and the film will be overseen by a British naval architect. Even the jolly roger will be made from British cloth.

Mr. Hanley: May I also suggest that my hon. Friend should declare an interest, as he has a minor part in the film "Amadeus"?

Mr. Key: Modesty had forbidden me from mentioning that fact. However, I must emphasise that it was in a purely amateur capacity, and I had no financial involvement. As I said on Second Reading, it is a marvellous film and I think that every hon. Member should see it forthwith.
May we be specific about what we are discussing in terms of cinemas? The decline in cinemas in the country has been sharp, although not as sharp perhaps as the decline in audiences. Over the 10-year period since 1974 the number of licensed public cinemas has fallen from 1,590 to 1,495, but the total of admissions has fallen from 143 million to 55 million. The number of staff in full-time and part-time employment in cinemas has halved in both categories.
When I was discussing the Bill with constituents, I addressed myself to the question of cinemas. It seemed to me that we had not discussed cinemas in any depth. I wrote to the obvious people, the distributors, to ask them what they thought about cinemas and their significance with respect to the Bill. I was told by the Rank Organisation that the reason that cinemas have declined so fast in the United Kingdom compared with other countries is partly because of language, which has protected the cinema in France and Germany, whereas the United Kingdom has a diet of mainly American films; secondly, that disposable income is much higher in the United States, France and Germany than in the United Kingdom; thirdly, that the quality of television varies widely and is probably best in the United Kingdom; fourthly, that due to legislation, taxation and rates, operating costs are probably higher in the United Kingdom than elsewhere, as is the cost of land, and consequently cinema prices tend to be higher; and, fifthly, that unemployment is higher in the United Kingdom, especially among young people. The next reason given is video penetration and demographic changes. The final point is that the United States on average enjoys much better weather, and that 20 per cent. of American cinemas are drive-in cinemas.
We have had an interesting experience in Salisbury recently. The cinema has been closed. It has been said that

the reason for the decline of the cinema is that nobody wants to go and nobody is interested any more. I think that the hon. Member for Ashfield would agree that many pensioners much enjoy going to the cinema, particularly to matinee performances. In Salisbury, when threatened with the closure of the cinema by the Rank Organisation, well over 20,000 people signed a petition to keep open the cinema which, in a town with a population of 40,000, is pretty good going.
Thorn-EMI Screen Entertainment had a somewhat different view from Rank. Rank professed that it did, indeed, have an interest in maintaining its distributor chain. Thorn-EMI was rather more open and honest about its own failings, I suppose, claiming that it did not give a particularly good service to the public in the past, that is, in the provinces, one cannot book seats, one has to stand in queues, often in the rain, there is usually nowhere to sit in comfort and, where cinemas have been twinned or tripled, one can often hear the sound from the adjacent theatre, there is no soap in the loos and one cannot find a towel even when one gets to the loo. All the cinemas are in the wrong areas. They should be near the communities, in shopping centres and so on. The local advertising of films is atrocious. As we know, EMI is remedying that situation as well as it can.
I turned for advice to the British Film Institute also. It pointed out that the remarkable level of penetration of video recorders could not be blamed entirely. Indeed, it was a symptom of the public enthusiasm for entertainment by film in spite of its apparent distaste for cinemas.

Mr. Tom Clarke: I was interested in what the hon. Gentleman said about cinema attendances. Would he care to predict — or, if not, would he encourage his hon. Friend the Minister to predict — the effect on cinema attendances if the Bill is enacted?

Mr. Deputy Speaker (Sir Paul Dean): I hope that the hon. Gentleman will not be tempted to go too wide of the amendment.

Mr. Key: Thank you for saving me, Mr. Deputy Speaker. I am sure that the Minister will address himself to that point. My hope, however, is that attendances will rapidly increase, and I should say why I think that that is likely to happen.
I refer here to the view of the British Film Institute, when considering evidence from other countries, as to what it believes to be wrong with the United Kingdom situation. First, there has been low or zero investment in cinema fabric refurbishment over many years. There has been no new cinema building in areas of likely audience concentration such as suburbs and out-of- town shopping centres, and that has occurred particularly in the United States. There has been a lack of effective competition between exhibitors to the benefit of the audience and a lack of strategic booking and promotion policies on the part of United Kingdom distributors. Those factors together have as much bearing on the disastrous decline in cinema attendance as has video penetration.
It has been said that Rank and EMI would prefer to be out of the business altogether. I cannot comment on that; it is merely hearsay. Looking at the profitability of that side of their industries, one can understand why they might wish to draw those conclusions. EMI has committed itself to a major programme. Rank has been less forthcoming.
I end on a note of optimism. Like my hon. Friend the Member for Wealden, I do not believe that people do not wish to go to cinemas. I think that they will go to cinemas if the cinemas are in the right place and offer the right kind of comfort and attraction for family entertainment. Having recently been not visibly involved in "Amadeus" but involved in the soundtrack only — I would not wish to put off any hon. Member from seeing the film; it is not necessary to see me — I have seen that end of the operation and the high quality of technology that is going into films. It is a tragedy that more people do not go to cinemas in which there is a high standard of reproductive facility to attract audiences.
I believe that what happened in the United States could happen here if the Government can convince me that they are right and that the supporters of the amendment are wrong. Cinemas in the United States are becoming more sumptuous. There is a complete reversal of the trend towards spartan facilities such as we tended to see in this country. It is significant that in the past two years alone more than 2,000 new cinemas have opened in the United States. Many have 500 or more seats which we are constantly told it is impossible to achieve in this country. The leading cinema owner of Sumner Redstone, president of the North-East Theatre Corporation of Boston, is reported as having said:
We have to compete for the public now and the only way is luxury.
There have been enormous strides in sound, and ultra-sophisticated equipment is the order of the day.
I believe that there is a great future for the cinema as opposed to just the film. I hope that the Minister in his reply will convince me that a levy is not the answer to this. I hope too that the distributors will convince the consumers that their policies are right and that they will meet demand with adequate cinema provision.

Mr. Norman Lamont: I am grateful to my hon. Friend the Member for Salisbury (Mr. Key) for making clear what he meant when he said that he had a part in the film "Amadeus". Indeed, until he made it clear, I wondered whether he played the part of Mozart or Salieri. I congratulate him on being involved in the film, and naturally I hope that he will be able to arrange for me to see it, as I have read so much about it.
A large part of the debate has revolved round the principle of the levy. As my hon. Friend the Member for Hendon, North (Mr. Gorst) said, it is not really the practicalities that we have been discussing in the debate. I agree with my hon. Friends the Members for Richmond and Barnes (Mr. Hanley) and for Thanet, North (Mr. Gale) that no doubt there are answers to some of the questions which I identified in my opening remarks. All that I sought to do was to say that we had not identified the answers to the questions posed in Committee. It is more than just a small point, because the reaction to a levy would vary according to the answers to those questions. Different people would have different opinions upon a levy, depending upon the answers to those questions. However, it is the principle that we have been discussing.
As my hon. Friend the Member for Hendon, North said, a large part of the debate has been about the restricted market. Questions such as these have been asked: is a cartel operating? Are the prices that are paid for films by television companies unfair? We have heard much about the duopoly. It is an imperfect market. It is literally more

than a duopoly. Channel 4, by coming along and financing its own films, is becoming a third force. In the debate we are talking about only part of the market. We are talking about levying part of the market that is available for films. We are talking about levying only part of the television market.
I would not deny for one moment that that section of the market is imperfect. I disagree with the suggestion that somehow the deficiencies of an imperfect market are corrected or made more perfect by introducing the distortion of a levy on top. I do not consider that the appropriate response.
Again and again we hear in the debate that it is not a free market. I hope I have made it clear that I do not think that it is. It is odd that Labour Members tend to say that in almost every debate. In shipbuilding debates, I am told that it is not a free market. I know that it is not a free market. I know that it is not a free market in the film industry as well. It is an imperfect market, but an imperfect market is better than no market at all, or no element of competition at all.

Mr. Gould: The peculiarity of this market is that there are 4 billion occasions on which the demand for the product is demonstrated, but the market reward for that demand cannot be paid to those who supply it because the market is controlled by a duopoly of television companies. The levy is simply a mechanism whereby that constriction of the market can be at least partly overcome.

Mr. Lamont: That is what the whole debate is about, and that is what I am addressing my remarks to.
To my mind, the fact that it is an imperfect market is not proof for the assertion that inadequate prices are being paid for films made by British film producers. That has been asserted rather than proven in the debate. Some hon. Members—not all—have accepted, perhaps uncritically, the claim by those who, after all, have an interest in the matter that producers' remuneration is not all that it might be.
My hon. Friend the Member for Wealden (Sir G. Johnson Smith) put a different gloss on that matter and gave a different set of arguments and examples. It was he who said that what we are often talking about are secondhand goods. We are talking about films which have exhausted their life in the theatrical cinema. If they had not, they would be exhibited. That is why the price for so many of those films is low. My hon. Friend also said that the prices must be compared with those that might be paid for cheaper American material that might be purchased by the BBC or the television companies if they had to face the demands of a levy.

Mr. Gorst: It is clear that it is common ground between my hon. Friend the Minister and everybody else that there is a distortion in the market. What is not clear is whether my hon. Friend concedes that, by whatever means, there is a need to help those who operate to a disadvantage in the market.

Mr. Lamont: What I am saying is that there is an element of competition. Of course, it is not a perfect market. It is not a free market. As has been demonstrated again and again, for example by my hon. Friend the Member for Wealden, there is an element of competition in the market.
The question whether there is rigging of prices in the market between the BBC and ITV, or between different


companies, is a serious one. I am sure that the Director General of Fair Trading will read the debate and note that. I am sure that he will consider what has been alleged and asserted. It is for him to investigate the matter and consider whether there is evidence of improper practice. The fact that people assert that inadequate prices are being paid is not, by itself, an argument for a levy. If there is a cartel, operating improperly, it should be investigated. However, that has not been proven beyond doubt and I do not believe that much evidence has been provided in the debate.

Mr. Gorst: rose—

Mr. Lamont: I was just about to refer to another point that my hon. Friend made. He put a good question to the House when he asked, if we had a system whereby films were provided through pay television, would the remuneration to film producers be less, the same or greater than at present? It is a brilliant question, but he gave no evidence for the answer, and he seems to think that it is self-evident that they would be paid more. I agree that the question is right, but of its nature it is almost unanswerable. If there is real evidence of price fixing or rigging of the market between the BBC and ITV, the Government or the Director General of Fair Trading should consider that, but it is not enough just to assert that the remuneration of producers is less than it should be simply because they say that that is so.

Mr. Ashdown: The Minister has denied as strenuously as the hon. Member for Wealden (Sir G. Johnson Smith) that a cartel is in operation—

Mr. Lamont: I did not.

Mr. Ashdown: I apologise to the Minister. The hon. Member for Wealden denied that such a cartel was in operation, but the Minister said that perhaps it was and should be looked into. Let us accept that no such cartel is in operation. If the Minister accepts that it is not a free market, however uncorrupted it may be now — taking that point as read—how long does he believe that, with only two buyers in the market place, it will remain a fair market that reflects fair prices? I ask the Minister to recall that he is setting up a permanent system to fund the film industry. Surely, with only two buyers in the market place, in time it must become corrupted. Does the Minister recognise that the system of levy is trying to measure demand in some other way as that demand cannot be measured by the free market system because it is an imperfect market?

Mr. Lamont: The Liberals are always accusing us of being dogmatic and theoretical, and always trotting out phrases about free markets and fair prices. Life consists of imperfect markets. That is the real world.

Mr. Ashdown: Answer the question.

Mr. Lamont: I will answer the question. I always do. The answer to imperfect markets is not to add distortions such as those proposed by the Opposition. I have been asked how long it will be before the situation alters. That depends on other matters.
My hon. Friend the Member for Gravesham (Mr. Brinton) talked about DBS, and my hon. Friend the Member for Salisbury talked about cable. I was asked whether there was a reason for believing that this

revolution and these changes might be slowing down. I concede that there might be problems. Progress on that front might not have been as fast as many of us had hoped or predicted, but I think most people feel that that is the way for the future. Undoubtedly the market for films will open up. Undoubtedly the restricted market will become wider and the element of monopoly or duopoly will gradually change. If that is the future, it is anachronistic and wrong to impose this levy on television companies.
7 pm
On top of that, we have to face the fact that there will be a voracious appetite for films on television. The EC Commission has calculated that by the late 1980s there will be a demand for about 125,000 hours of fiction per year. That far surpasses the combined film production at present of France, Germany, Italy and the United Kingdom. A large market is opening up.

Mr. Gorst: My hon. Friend referred to the Director General of Fair Trading. Is he aware that all the information that one is able to glean about prices comes from the ITV companies? As far as I am aware, the IBA does not know at what price its programme contractors buy in their material. The BBC is extremely cagey about prices as well. Therefore, my hon. Friend's suggestion that the Director General of Fair Trading should look at the matter is not only sensible but welcome, and I hope that he will pursue it.

Mr. Lamont: My hon. Friend would not wish to misrepresent me. I said that if there were evidence of abuse the Director General of Fair Trading would obviously wish to consider that, and that I was sure he would read the debate. However, I take my hon. Friend's point seriously. I am anxious to look at some of these points about prices. I have had conversations with people in the industry about this vexatious question, and the answers have been no more enlightening than the debate. There have simply been assertions after assertions. I agree that there is a case for finding out more of the facts about it. However, until we have the facts, the argument for the levy does not stand up.
It must be emphasised, as my hon. Friend the Member for Wealden emphasised, that television companies have a vested interest in film production. He referred to what Channel 4 is doing for film production. The Channel 4 "Film on Four" programme alone has spent £14·5 million on films. The BBC expenditure on films has, in the past five years, increased by about 100 per cent. Would these sums of money be made available if there were a levy? That is open to question.

Mr. David Crouch: My hon. Friend may remember that although I was not on the Committee I took a considerable interest in the Bill on Second Reading. I am a considerable film viewer, but I never go to the cinema. I support the film industry. I think my hon. Friend knows that I have a great interest in the theatrical industry. If I go to the theatre, I pay £15 for a ticket, or else I cannot get a seat. However, I can wait to see "Amadeus" on television, and that is unfair. Whatever my hon. Friend is saying, there is not a glowing future for the film industry. There is not a great expanding market. I can see those films which I like to watch by staying at home and paying £47 or £65 to the BBC. The film industry does not have a great future.

Mr. Lamont: With great respect to my hon. Friend, who is a friend of mine, his intervention or little speech went over much ground. If I reply to all his points, I shall repeat the debate that we had in Committee and a large part of the debate that we have had this afternoon. I am pleased that he has been able to join us at this stage in the proceedings, but he will forgive me if I do not answer all his points.
The hon. Member for Dagenham (Mr. Gould) did not answer the point about what would stop the BBC and independent television companies from cutting back on the amount that they already spend on television film if there were this levy. This is a fundamental and important point.

Mr. Gould: I offered a number of points, but the fundamental one is that, even with the levy, the buying in of feature films by the television companies is so much the cheapest form of television that the companies would be a long way from giving up the practice. It would still be the thing that they would be bound to do.

Mr. Lamont: The hon. Gentleman's point illustrates what I was saying. Any pressure put on the television companies by the levy will intensify pressure to buy the cheapest forms of entertainment, such as some American films. The hon. Gentleman, for all his attempts to answer the question, did not address himself to the point, and nor did the hon. Member for Yeovil (Mr. Ashdown). The hon. Member for Ashfield (Mr. Haynes), who is sitting on the Front Bench now, addressed himself to that question when he was on the Back Benches a few minutes ago. His answer was the right one, and I am not sure whether he should not now retreat to the Back Benches again. He was right in saying that there was a great danger that the levy might lead to less money being spent by the television companies on British films.
My hon. Friend the Member for Gravesham attempted to widen the debate to consider the finances of the British film industry. He said that unless there were a levy there would not be adequate support for the British film industry. We were perhaps moving towards the arguments that we had in Committee about the level of funding for the son of the NFFC and capital allowances, and so on. Again, my answer to my hon. Friend the Member for Gravesham was given by my hon. Friend the Member for Wealden. Even if the Government have got it wrong about the finances for the British film industry, that is not an argument for imposing a levy for British films on television.
My hon. Friend the Member for Salisbury was wholly right to emphasise that one cannot base a film industry largely on the prosperity of the television industry. If the film industry is to survive and prosper, we must reverse the trend of decline in our cinemas. A good British film industry must have a strong cinema sector. It cannot survive simply by showing films on television. To impose a levy on the television companies based on films shown on television would be merely to repeat the errors that we had before with the Eady levy. The Eady levy on films shown on cinemas was a mistake, and to extend that principle to the television sector would be an equally grave error.
For those reasons, I urge my hon. and right hon. Friends to vote for the amendment.

Question put, That the amendment be made:—

The House divided: Ayes 224, Noes 164.

Division No. 90]
[7.10 pm


AYES


Alexander, Richard
Hamilton, Neil (Tatton)


Amess, David
Hannam, John


Ancram, Michael
Hargreaves, Kenneth


Arnold, Tom
Harris, David


Ashby, David
Hawkins, C. (High Peak)


Atkins, Robert (South Ribble)
Hayes, J.


Atkinson, David (B'm'th E)
Hayward, Robert


Baker, Rt Hon K. (Mole Vall'y)
Henderson, Barry


Baker, Nicholas (N Dorset)
Hickmet, Richard


Baldry, Tony
Higgins, Rt Hon Terence L.


Banks, Robert (Harrogate)
Hind, Kenneth


Beaumont-Dark, Anthony
Holland, Sir Philip (Gedling)


Bellingham, Henry
Holt, Richard


Benyon, William
Hordern, Peter


Bevan, David Gilroy
Howarth, Gerald (Cannock)


Blackburn, John
Howell, Ralph (N Norfolk)


Blaker, Rt Hon Sir Peter
Hunt, David (Wirral)


Boscawen, Hon Robert
Hunter, Andrew


Bottomley, Peter
Johnson Smith, Sir Geoffrey


Bottomley, Mrs Virginia
Key, Robert


Bowden, Gerald (Dulwich)
King, Roger (B'ham N'field)


Bright, Graham
Knight, Mrs Jill (Edgbaston)


Brooke, Hon Peter


Lamont, Norman


Brown, M. (Brigg &amp; Cl'thpes)
Lang, Ian


Bruinvels, Peter
Lawler, Geoffrey


Bryan, Sir Paul
Lawrence, Ivan


Buchanan-Smith, Rt Hon A.
Leigh, Edward (Gainsbor'gh)


Buck, Sir Antony
Lennox-Boyd, Hon Mark


Budgen, Nick
Lightbown, David


Burt, Alistair
Lilley, Peter


Butcher, John
Lloyd, Peter, (Fareham)


Carlisle, John (N Luton)
Lord, Michael


Carlisle, Kenneth (Lincoln)
Luce, Richard


Carttiss, Michael
Lyell, Nicholas


Chapman, Sydney
McCurley, Mrs Anna


Chope, Christopher
Macfarlane, Neil


Clark, Hon A. (Plym'th S'n)
MacGregor, John


Clark, Dr Michael (Rochford)
MacKay, Andrew (Berkshire)


Clarke, Rt Hon K. (Rushcliffe)
Maclean, David John


Colvin, Michael
Major, John


Coombs, Simon
Malins, Humfrey


Cope, John
Malone, Gerald


Couchman, James
Maples, John


Dickens, Geoffrey
Marland, Paul


Dicks, Terry
Marlow, Antony


Dorrell, Stephen
Marshall, Michael (Arundel)


Douglas-Hamilton, Lord J.
Mates, Michael


Dover, Den
Mather, Carol


Dunn, Robert
Mawhinney, Dr Brian


Dykes, Hugh
Mayhew, Sir Patrick


Edwards, Rt Hon N. (P'broke)
Mellor, David


Eggar, Tim
Merchant, Piers


Emery, Sir Peter
Meyer, Sir Anthony


Evennett, David
Miller, Hal (B'grove)


Eyre, Sir Reginald
Mills, Iain (Meriden)


Fairbairn, Nicholas
Mills, Sir Peter (West Devon)


Fallon, Michael
Moate, Roger


Farr, Sir John
Monro, Sir Hector


Favell, Anthony
Montgomery, Sir Fergus


Fenner, Mrs Peggy
Moore, John


Finsberg, Sir Geoffrey
Morris, M. (N'hampton, S)


Fletcher, Alexander
Morrison, Hon C. (Devizes)


Fookes, Miss Janet
Morrison, Hon P. (Chester)


Fowler, Rt Hon Norman
Moynihan, Hon C.


Fox, Marcus
Murphy, Christopher


Fry, Peter
Neale, Gerrard


Galley, Roy
Normanton, Tom


Garel-Jones, Tristan
Norris, Steven


Gow, Ian
Onslow, Cranley


Gower, Sir Raymond
Oppenheim, Phillip


Green way, Harry
Ottaway, Richard


Gregory, Conal
Page, Sir John (Harrow W)


Griffiths, E. (B'y St Edm'ds)
Page, Richard (Herts SW)


Grist, Ian
Parris, Matthew


Ground, Patrick
Patten, Christopher (Bath)


Grylls, Michael
Pawsey, James


Gummer, John Selwyn
Peacock, Mrs Elizabeth


Hamilton, Hon A. (Epsom)
Percival, Rt Hon Sir Ian







Pollock, Alexander
Taylor, John (Solihull)


Portillo, Michael
Tebbit, Rt Hon Norman


Powell, William (Corby)
Temple-Morris, Peter


Prentice, Rt Hon Reg
Terlezki, Stefan


Price, Sir David
Thomas, Rt Hon Peter


Renton, Tim
Thompson, Donald (Calder V)


Rhodes James, Robert
Thompson, Patrick (N'ich N)


Ridley, Rt Hon Nicholas
Thornton, Malcolm


Ridsdale, Sir Julian
Thurnham, Peter


Roberts, Wyn (Conwy)
Townend, John (Bridlington)


Robinson, Mark (N'port W)
Tracey, Richard


Roe, Mrs Marion
Trippier, David


Rossi, Sir Hugh
Trotter, Neville


Ryder, Richard
Twinn, Dr Ian


Sackville, Hon Thomas
van Straubenzee, Sir W.


Sainsbury, Hon Timothy
Waddington, David


Sayeed, Jonathan
Wakeham, Rt Hon John


Shaw, Sir Michael (Scarb')
Walker, Bill (T'side N)


Shelton, William (Streatham)
Waller, Gary


Shepherd, Colin (Hereford)
Ward, John


Silvester, Fred
Wardle, C. (Bexhill)


Sims, Roger
Watson, John


Skeet, T. H. H.
Watts, John


Smith, Tim (Beaconsfield)
Wells, Bowen (Hertford)


Speed, Keith
Wheeler, John


Speller, Tony
Whitfield, John


Spence, John
Whitney, Raymond


Spencer, Derek
Wilkinson, John


Squire, Robin
Wolfson, Mark


Stanbrook, Ivor
Wood, Timothy


Stern, Michael
Yeo, Tim


Stevens, Lewis (Nuneaton)
Young, Sir George (Acton)


Stewart, Allan (Eastwood)



Stewart, Andrew (Sherwood)
Tellers for the Ayes:


Sumberg, David
Mr. Michael Neubert and


Taylor, Rt Hon John David
Mr. Tony Durant.


NOES


Alton, David
Deakins, Eric


Archer, Rt Hon Peter
Dewar, Donald


Ashdown, Paddy
Dixon, Donald


Ashton, Joe
Dobson, Frank


Bagier, Gordon A. T.
Dormand, Jack



Banks, Robert (Harrogate)
Douglas, Dick


Barnett, Guy
Dubs, Alfred


Barron, Kevin
Duffy, A. E. P.


Beckett, Mrs Margaret
Dunwoody, Hon Mrs G.


Beith, A. J.
Eadie, Alex


Benn, Tony
Eastham, Ken


Bennett, A. (Dent'n &amp; Red'sh)
Edwards, Bob (W'h'mpt'n SE)


Bidwell, Sydney
Evans, John (St. Helens N)


Boyes, Roland
Ewing, Harry


Bray, Dr Jeremy
Fatchett, Derek


Brinton, Tim
Faulds, Andrew


Brown, Gordon (D'f'mline E)
Field, Frank (Birkenhead)


Brown, Hugh D. (Provan)
Fields, T. (L'pool Broad Gn)


Brown, N. (N'c'tle-u-Tyne E)
Fisher, Mark


Bruce, Malcolm
Flannery, Martin


Buchan, Norman
Foot, Rt Hon Michael


Caborn, Richard

Foulkes, George


Callaghan, Jim (Heyw'd &amp; M)
Freeson, Rt Hon Reginald


Campbell, Ian
Gale, Roger


Campbell-Savours, Dale
Garrett, W. E.


Carter-Jones, Lewis
George, Bruce


Clark, Dr David (S Shields)
Godman, Dr Norman


Clarke, Thomas
Golding, John


Clay, Robert
Gorst, John


Clwyd, Mrs Ann
Gould, Bryan


Cocks, Rt Hon M. (Bristol S.)
Gourlay, Harry


Cohen, Harry
Hanley, Jeremy


Concannon, Rt Hon J. D.
Hardy, Peter


Cook, Frank (Stockton North)
Harman, Ms Harriet


Corbyn, Jeremy
Harrison, Rt Hon Walter


Cowans, Harry
Hattersley, Rt Hon Roy


Cox, Thomas (Tooting)
Hogg, N. (C'nauld &amp; Kilsyth)


Craigen, J. M.
Home Robertson, John


Cunliffe, Lawrence
Howells, Geraint



Cunningham, Dr John
Hoyle, Douglas


Davies, Ronald (Caerphilly)
Hughes, Dr. Mark (Durham)


Davis, Terry (B'ham, H'ge H'l)
Hughes, Robert (Aberdeen N)





John, Brynmor
Prescott, John


Johnston, Russell
Radice, Giles


Jones, Barry (Alyn &amp; Deeside)
Randall, Stuart


Kaufman, Rt Hon Gerald
Redmond, M.


Kennedy, Charles
Rees, Rt Hon M. (Leeds S)


Leadbitter, Ted
Rhys Williams, Sir Brandon


Leighton, Ronald
Richardson, Ms Jo


Lewis, Ron (Carlisle)
Roberts, Allan (Bootle)


Lewis, Terence (Worsley)
Robertson, George


Litherland, Robert
Robinson, G. (Coventry NW)



Lloyd, Tony (Stretford)
Rooker, J. W.


Loyden, Edward
Rowlands, Ted


McCartney, Hugh
Sheerman, Barry


McDonald, Dr Oonagh
Short, Ms Clare (Ladywood)


McGuire, Michael
Short, Mrs R.(W'hampt'n NE)


McKay, Allen (Penistone)
Skinner, Dennis


McKelvey, William
Smith, C.(Isl'ton S &amp; F'bury)


McNamara, Kevin
Snape, Peter


McTaggart, Robert
Soley, Clive


McWilliam, John
Spearing, Nigel


Madden, Max
Steel, Rt Hon David


Marek, Dr John
Stewart, Rt Hon D. (W Isles)


Marshall, David (Shettleston)
Stott, Roger


Mason, Rt Hon Roy
Strang, Gavin


Maxton, John
Thompson, J. (Wansbeck)


Maynard, Miss Joan
Thorne, Stan (Preston)


Meadowcroft, Michael
Tinn, James


Michie, William
Wainwright, R.


Mikardo, Ian
Wallace, James


Millan, Rt Hon Bruce
Wardell, Gareth (Gower)


Morris, Rt Hon A. (W'shawe)
Welsh, Michael


Morris, Rt Hon J. (Aberavon)
White, James


Nellist, David
Wigley, Dafydd


O'Brien, William
Williams, Rt Hon A.


O'Neill, Martin
Wilson, Gordon


Orme, Rt Hon Stanley
Winnick, David


Park, George
Woodall, Alec


Parry, Robert
Young, David (Bolton SE)


Patchett, Terry



Pendry, Tom
Tellers for the Noes:


Penhaligon, David
Mr. James Hamilton and


Pike, Peter
Mr. Frank Haynes.

Question accordingly agreed to.

Clause 3

DISSOLUTION OF NATIONAL FILM FINANCE CORPORATION

The Parliamentary Under-Secretary of State for Trade and Industry (Mr. David Trippier): I beg to move amendment No. 6, in page 3, line 18, leave out 'may' and insert 'shall'.
Clause 3 relates to the disposal by the Secretary of State of the assets which will be vested in him on the dissolution of the National Film Finance Corporation. I have on previous occasions outlined the Government's intentions in that respect. Some concern was expressed in Committee that the discretionary nature of the present drafting of the Bill did not impose a sufficient duty on the Secretary of State to ensure that any such property, right or amount would be used for purposes connected with the British film industry.
I accepted the thrust of the argument presented by hon. Members and undertook to table an amendment which would convey the same obligation. Amendment No. 6 is designed to reflect more clearly the Government's intentions in respect of the disposal of the NFFC's assets. I trust that hon. Members will feel that it meets that purpose and that they will support it.

Mr. Gould: The Minister is right to say that he gave the undertaking in Committee. I need say no more than that we are grateful to him for having carried out that undertaking.

Amendment agreed to.

Mr. Gorst: I beg to move amendment No. 7, in page 3, line 20, at end add—
'provided that he has laid before Parliament the terms and conditions upon which any such arrangements are to be made not less than 28 sitting days before they are to come into effect'.

Mr. Deputy Speaker: With this it will be convenient to take amendment No. 32, in page 3, line 34, at end insert—
'(3A) The conditions referred to in subsection (3) shall include a condition that the company to which any right may be transferred under that subsection shall transfer to the Secretary of State one special share which entitled the Secretary of State to exercise a right of veto over the transactions of the company if he deems that they fail to satisfy him as to the matters specified in subsection 3(a) and (b).'.

Mr. Gorst: The purpose of amendment No. 7 was to ensure that the company known as the son of NFFC was set up on terms that were known in advance to Parliament. The Minister's arrangements were not available to us in Committee in any detail, and many of us felt concerned about that. Indeed, it was only yesterday that those who have taken an active interest received the heads of agreement from the Department.
The amendment was originally intended to ensure that discussion had to take place on Report. It is fair to say that, having seen the heads of agreement, the amendment has a rather more substantial purpose than purely probing. The question that has to be answered is whether the terms are satisfactory from the point of view of protecting the new arrangement for the British film industry from being dissembled, dispersed or in any other way disposed of after a short or medium period.
Our information was sketchy, general and rather unspecific when it should have been precise. It raised, and still raises, a number of unanswered questions. One is still not satisfied that the Secretary of State's powers are as adequate or complete as they should be in order to guarantee the company. Perhaps they are, but not on the evidence so far available. I concede that the Minister has taken a lot of trouble to inform us, but he has not yet succeeded in satisfying us.
I understand from the draft agreement that a new limited partnership will be formed. I understand from my researches that a limited partnership means that the partners will be divided into those who would be called general partners and others who would be called limited partners, the latter contributing to the partnership assets of a specific amount in money or money's worth and enjoying immunity from liability beyond the amount so contributed. However, an essential condition of that immunity is that a limited partner should not take part in the management of the business.
I presume that the purpose of that rather uncommon arrangement is to ensure that the members of the consortium are unable to interfere too much in matters other than the establishment of policy. So far, I would say, so good. But the problem arises that we do not know whether the initial members of the consortium are to be general or limited partners. If they are general partners, they will have an unlimited liability.
It is clear from the heads of agreement that the Government will not in any sense be a general partner,

since it is specifically said that only British companies will have that status. Therefore, I understand that if they are general partners, they will have the capacity, first, to have an unlimited liability, but, secondly, to interfere with the activities of the chief executive, about which a great deal of concern was expressed in Committee. When my hon. Friend the Minister enlightens us further on this point, I hope that he will be able to say exactly what will be the status of the various partners.
Another aspect of limited partnership puzzles me. The 1907 Act, which formed that arrangement, stipulated that there could be not more than 20 partners in such an arrangement, unless they were in surveying, auctioneering, valuing, estate agency, land agency and estate management, which clearly none of the partners is or is likely to be. Therefore, one foresees that the arrangement will be curtailed to not more than 20 participants within one consortium. Can my hon. Friend confirm that or tell me that I am wrong? If he confirms that, will he say why it is to be so severely curtailed? Those are the questions that seem immediately to occur to me on the structure that is proposed.
Various options are open to us in deciding whether to press the amendment. We can give the Secretary of State the benefit of the doubt; we can pass the Bill unamended and wait and see how history works itself out; we can write amendment No. 7 into the Bill so that the Secretary of State must tell Parliament more each year or whenever anything is happening and he is coming to an arrangement; or we can insist on amendment No. 32, which has been tabled by the Opposition, about which we had a great deal of discussion in Committee and in which many of my hon. Friends were sympathetically interested. In other words, we can remain sceptical about the Secretary of State's arrangements and demand that he has a fall-back position in the shape of a special share.
My preference would not be for the first of those three options — to give the Secretary of State the benefit of the doubt—not because I do not trust him, but because, in effect, it is unlikely that the arrangement which is being entered into can be judged in fewer than three years or more probably in five.
7.30 pm
We cannot foretell either the market or what any future Government might feel disposed to do about this arrangement. Therefore, I believe that we should have something far more concrete available to the House for monitoring the position.
I prefer a combination of my amendment and amendment No. 32, which the Opposition have tabled. The truth of the matter — and we went into this in considerable detail on the last group of amendments—is that, because the industry still operates in an unfree, fettered market, the duopoly will continue and the menace of the kid glove, the unspoken agreement, will persist. Therefore, I believe that Parliament's job is to act as some form of long-stop referee.
I hope that my hon. Friend will now be in a position to answer some of the questions, many more of which arise, on the document which he has given to us. I am sure the House will want to be satisfied about those, too, but I shall not delay it any further by going into that kind of detail.

Mr. Gould: Like the hon. Member for Hendon, North (Mr. Gorst), I am grateful to the Minister for his sending


to each member of the Committee, I believe, a copy of the draft memorandum of understanding with the new consortium. That has been extremely helpful. It gives us some more or less tangible idea as to how the Minister's mind is working. However, it leaves us with some difficulties because it is obviously still a draft memorandum and it fails to satisfy at least the Opposition on what is perhaps our central concern — that there should be something, preferably in the Bill, to enable the House to monitor the activities of the consortium and how they are likely to affect the future of the film industry. The difficulty is that the draft agreement, which may in the fullness of time become a legally binding contract, is likely to operate outside the attention of Members of the House.
The draft agreement goes some way, in intention if not in mechanism, to meet some of the points made in Committee. It suggests, although we have yet to see the draft specification for the chief executive's role, that the Government and the consortium recognise the importance of some independence on its part. We have perhaps less reason to be pleased about the extent to which the memorandum recognises that the cultural significance and future of the industry as a whole should also weigh in the considerations of the consortium. In other words, it should be not just the commercial interests of that particular group of companies which should determine its decisions and actions.
One of the problems here is that, as the statement issued by the six constituent bodies of the industry points out, even as the draft memorandum stands, the consortium may exist solely or at least principally to serve the commercial interests of the constituent parts and have very little to do with the future of the industry. For example, that statement — which I again commend to the attention of the Minister—raises the possibility that the constituent parts of the consortium may see it simply as a means of sharing the risk in projects in which they may have lost faith. They will be able to lay off the risk by handing it over to the consortium. If they entrust a particular project to the consortium and find that it has exceeded their expectations, the danger is that they may poach on the consortium and draw the project back into their own grasp. There is very little in the draft memorandum, as we see it at present, to explain how these various difficulties are to be avoided and reduced.
I believe that we still have not resolved the fundamental problem — that the Government are intent on handing over both the resources and the responsibilities in this area to a private firm, whereas hitherto many people have considered that, if there is to be an injection of public money, such responsibilities should be undertaken by an institution in which the public interest is at least represented in some way or other.
One way of achieving that, as the hon. Member for Hendon, North explained, is to ensure that at some point those matters are brought to the Floor of the House. I believe that his amendment would to some degree achieve that objective. I am entirely in agreement with him that some such mechanism for public and parliamentary accountability ought to be put in place.
There is a whole range of further anxieties. I shall not weary the House by rehearsing them all, because many of them were adequately covered in Committee. However,

I single out the very short-term nature of the obligation being entered into by the consortium. I am extremely concerned about what might happen if, after three years, the consortium simply said it had not worked and its members proposed to withdraw. We need further assurances from the Minister as to what the Government would do. Who would own the property at present in the hands of the National Film Finance Corporation? Does he recognise that it is in every sense public property — property that has arisen by virtue of a levy, property that belongs to the industry as a whole? Can he give us an assurance that, even if the consortium for one reason or another fails, the Government's support for and interest in the industry will continue and that that property belonging to the industry will continue to be devoted to the purposes of the industry?
I wish to reinforce the questions asked by the hon. Member for Hendon, North about that interesting creature, the limited partnership. I understand that, for some purposes at any rate, this topic will arise on a later group of amendments, but it might be just as well if the Minister could answer some of these questions now. The point that I am particularly interested in—the answer to which I could perhaps have discovered if I had looked up the 1907 Act but with which I think he may be able to provide me—is to what extent the partners can exchange or change roles. Can someone who has been a limited partner suddenly decide to become a general partner and vice versa? Who is to be what? What is the purpose of this distinction in this case? Why has this particular mechanism been set up?
I turn now to amendment No. 32, which suggests that, before transferring what is in effect public property to this new consortium, the Minister should make it a condition that something in the nature of a golden share be transferred to the Government. I find it hard to believe that the Minister could object to that in principle, since he must know that his right hon. Friend the Secretary of State has heartily and strongly endorsed the whole concept of the golden share in defending his actions in selling off shares in British Aerospace. In a letter, which has been published, he has made a powerful defence of this whole mechanism. It is, of course, a device which is now used by the Government in a whole range of privatised enterprises — Cable and Wireless, Amersham International, Jaguar, Britoil, Enterprise Oil, British Telecom and British Aerospace. It is a very long list. I cannot believe that there could be any objection in principle to something which has been sanctified by Government practice. Therefore, I think the Minister will have to explain why, if in all those other cases a golden share was a proper means of protecting the public interest, for some reason in this case, which in its nature and all its central aspects is on all fours with the others, it is not considered appropriate.
The NFCC was important to the future of the film industry, not just because it was the means by which money was made available to the industry. The corporation did an excellent job in deciding how that money should be spent. Many excellent films — more recently, "Another Country" is a good example — depended for their production on money provided through the NFFC.
The real importance of the NFFC was not just as a conduit for money, but as a statement by the Government,


and by the community at large through the Government, that they had a stake and interest in the future of the British film industry.
My fear about what is proposed in the Bill is that that statement of support will be lost, and that, unless we can somehow inject into the film industry that element of public interest and accountability, the industry will be left to go its own way, and its own way may be a downward spiral.

Mr. Norman Lamont: I am grateful to my hon. Friend the Member for Hendon, North (Mr. Gorst) and the hon. Member for Dagenham (Mr. Gould) for responding with some modified enthusiasm for the draft heads of agreement which I circulated to members of the Committee. Even if hon. Members do not agree with them entirely — and even if they do not go as far as they would have wished — they at least clarify some of the questions that were raised in Committee. This amendment is a convenient opportunity to enlarge on some of the points that could not be answered then.
My purpose in putting the draft heads of agreement before members of the Committee was to try to reassure them, for I recognised the legitimacy of the point that the hon. Member for Dagenham made about wanting to be assured that this was not just a commercial organisation but a body which would have regard to the cultural aspects of film making and would be a force towards underpinning that important aspect of our cultural life. The provisions of the draft heads of agreement do just that.
I do not wish to weary the House, but in addition to answering the questions that have been put to me I shall comment on the chief executive, the chairman and the role of Government director, points which were raised in Committee.
The principal participants in the "son of NFFC" announced on 25 January the details which we are now discussing. As I pointed out earlier, they have decided to call the new body the British Screen Finance Consortium. It will be structured as a limited partnership, initially comprising the four organisations already identified — Channel 4, Rank, Thorn-EMI and members of the British Videogram Association — together with a general partner. This general partner will be a new limited liability company to be owned jointly by the limited partners and will undertake the management of the business.
The company will have a board on which the major investors, together with the Government, will be represented. The main functions of the board will be limited to the definition of the parameters within which the chief executive will make all major editorial and investment decisions.
7.45 pm
I was asked about the limit of 20 in the limited partnership under the 1907 Act. This can be enlarged by order of the Secretary of State, and an application for such an order would be favourably considered.
The partners could, by agreement at some future date, form themselves into a company. The Bill—which will, we hope, be amended in our proceedings later tonight—preserves flexibility for the "son of NFFC" to be a partnership or a company.
Hon. Members also wanted to know about the chief executive. At one point it was even suggested that the chief executive should be independently appointed. That would be difficult to reconcile with the reality that we are

discussing a principal employee of a private company, albeit a private company in which there will be strong Government involvement and continuing Government interest and support.
I recognise the sincere concern that was expressed that the chief executive might be biased or simply an extension of the interests of the various partners in the consortium. I have been given assurances by the partners. The chief executive's role will be to plan, direct and co-ordinate the operations of the company within the framework of policies established by the board of directors so as to ensure both that the company's objectives are achieved and that the company fulfils its responsibilities.
In practical terms, the chief executive is likely to be the ultimate decision-maker of whether to support particular films. It would be silly to assert that the chief executive will be independent in the sense of not being accountable or being wholly without restrictions on his authority or judgment.
I know that none of the partners wishes to exercise day-to-day supervision and that, within broad guidelines, the chief executive will be free to make his or her own commercial and artistic judgments. There will, within a few days, be advertisements for the recruitment of the chief executive.
Hon. Members were also interested in the role of the chairman of the management company of the British Screen Finance Consortium. His appointment is to be subject to Government approval. In broad terms, the chairman will be expected to set the policies of the company and support the chief executive and, in particular, he will need to ensure that the company's objectives, policies, plans, organisation and external results satisfy the interests of the shareholders.
He will also want to ensure that the operations of the company are carried out in a manner that respects the interests of the recipients of the loans and the film community at large. In addition, I would expect him to keep in mind the terms of the contractual relationship with the Government and the need for responsible stewardship of the assets contained in the portfolio.
Lest, when I referred to the interests of shareholders, I detected from Opposition Members a frisson, they will recall what I said about dividends not being expected in the first three years. I hope, therefore, that before they get too alarmed over my statement they will bear in mind what I said in Committee.
The question of the director to be nominated by the Government was raised in particular by my hon. Friend the Member for Hendon, North. It goes without saying that the Government director, like all directors under common law and the Companies Act, must have general responsibilities to the BSFC management company for the control and management of its business. In common with Government nominee directors on the boards of other private sector companies, he will not be a delegate on the board on which he serves. His duties as a director are owed to the management company, but he will have further responsibilities stemming from the fact that the Government have a special contractual and financial relationship with the consortium and will therefore need to take special interest in the consortium's affairs.
We regard the chairman as the principal point of contact in our discussions on the consortium's performance and strategy, but we shall on occasion seek the opinion of the Government director on these and similar matters. For his


part, the Government director will seek to ensure that the Government are informed promptly of any significant developments of interest to us, whether as the providers of finance or more generally in the way of the Government having an interest in the film industry. In short, the director will be the Government's watchdog in the sense of seeking to ensure that the terms on which the Government have agreed to fund the consortium are observed.
The hon. Member for Dagenham referred to monitoring. I have been outlining how we shall be monitoring through the Government director. I take his point about Parliament's role and the need for reporting to the House. I hope that I shall be able to respond constructively and favourably to a later amendment which was tabled by my hon. Friend the Member for Hendon, North. However, the amendment is rather ambiguous and much depends on what my hon. Friend thinks it means. I accept that there should be some monitoring by Parliament and some reporting to Parliament of what has been happening. I shall try to respond in a helpful manner to my hon. Friend and his amendment.
I turn to the discussions that have been taking place with a view to the contractual arrangements with the consortium. Obviously, until the partnership is formed, it will not be possible for the Government to make a contract with it. However, in our discussions with the prospective partners we have reached agreement on what the contract is likely to contain. Indeed, hon. Members have a copy of the document. The document, of necessity, is no more than a statement of intent at this stage, but it represents the agreed intentions of the four participants and the Government and it has been initialled by both sides. I shall draw attention to its salient points.
First, the Secretary of State agrees to license to the consortium the portfolio of the NFFC's rights and interests in films. The hon. Member for Dagenham asked what would happen to the assets and the answer is that they are licensed. In effect, they are on loan. If anything went wrong with the consortium, or if we felt that it was not doing what was in the interests of the British film industry, the Government would be able to retrieve the assets. As the House knows, we shall also make available £1·5 million for five years. That is a commitment that gives some security for the future. It is a commitment by the Government to continue supporting the organisation for five years.

Mr. Brinton: Will my hon. Friend confirm that the £1·5 million that has been offered by the Government for five years will not become involved in taxation? Will he address some of the money for use in investment?

Mr. Lamont: The money will be made available by loans to the consortium. We envisaged originally that the money would be made available by grant, but it will be made available by loan at the request of the partners. They see that as the most convenient arrangement for them for tax purposes. These amounts, which will take the form of loans, will be drawn down only against need and will be used wholly for investment in British films and the reasonable operating costs of the consortium. For its part the consortium will discharge, from funds set aside by the NFFC and transferred by the Secretary of State to the consortium, forward commitments agreed by the NFFC

and outstanding upon its dissolution. The consortium proposes to obtain from its members at least 1·1 million a year for three years. The initial members do not envisage that any dividends will be paid during the first three years.
The structure and organisation of the new body will be subject to the approval of the Secretary of State. Future entrants to the consortium are welcomed on matching terms provided that they are bound by the agreed arrangements. The Secretary of State and each full member of the consortium will be entitled to representation on the board and the Secretary of State will also have the right to approve the chairman. I repeat what I said in Committee, which was that we see this as a dynamic and growing body. We would welcome other participants in it and that could be a means by which more finance will be channelled for the benefit of the industry.
The Government have received representations that the commitment of the NFFC to the support of short films should not be allowed to die when the NFFC is dissolved. In the past the Eady levy has provided a valuable, if somewhat artificial, incentive for the distribution of short films to cinemas. The demise of the levy will therefore remove what remains of that incentive. Yet it is widely, if not universally, recognised that the short film — the hon. Member for Islington, South and Finsbury (Mr. Smith) is interested in this — is the ideal nursery or proving ground for new talent, be it producers, directors or whatever. Moreover, there is still a place in the cinema programme for a well made short. It has been suggested to us that it is a natural extension of some of the project development activities which the development scheme is intended to foster. We have therefore decided to enlarge the scope of the scheme to embrace the financial support of the production of shorts. Amendments for that purpose have been tabled.
Secondly, both the consortium and the Government recognise the concern that is expressed in some quarters that the performance of this activity by the consortium might be thought to work to the disadvantage of the independent film maker. It was in recognition of that concern that we said that we intended to make it a condition of the agency contract that the consortium must use independent consultants with no financial interest in the consortium or its component companies.
The heads of agreement conclude with a number of safeguards. First, the management company of the consortium must be a British company as that is defined in the Bill. The defintion is based on previous legislation. Secondly, the members of the consortium may withdraw but may not dispose of their interests except with the approval of the Secretary of State and all the other members of the consortium. Thirdly, there are conditions on the exploitation of the NFFC portfolio, and any revenues generated from the portfolio must be used for investment in British films. Fourthly, the Secretary of State may withdraw the licence if the consortium is wound up or if he is not satisfied that the funds that he has made available are being invested in British films.
I think that the heads of agreement take account of the various points raised by hon. Members at earlier stages of the debate. However, it has been suggested that the contract should oblige the consortium to repay moneys advanced if the company failed to honour its commitments. At that time it was assumed that the Government's contribution, as I said in response to my hon. Friend the Member for Gravesham (Mr. Brinton),


would probably take the form of grants. This matter has not been settled but it seems likelier that the consortium would prefer to receive support in the form of loans. My Department will certainly be monitoring the use made of the portfolio and the Government's contribution, and under the contract it would be open to the Government to sue for repayment of grants. Loans could be repaid if they were misapplied in any way.
Although we have debated this matter and I have considered it, I am not persuaded that it would he reasonable to go further by requiring the repayment of previous contributions that have been properly applied. In finalising the contractural details, we shall ensure that any sums made available by way of grant or loan which are not applied for the purposes intended shall be immediately recoverable.
The discussions that we have had with the respective partners have laid a foundation for a contract that should satisfy any fair-minded observer that there are proper and reasonable safeguards for the NFFC's assets and that public money is given to this body so that we can further the interests of the British film industry. I have tried to build into the agreement the points that worried the Committee.

8 pm

Mr. Gorst: I am grateful to my hon. Friend the Minister for the considerable further explanation that he has given. It would be difficult to probe further on this occasion, even if further probing were necessary. If further probing is necessary after the industry and others have given more thought to my hon. Friend's statement, clearly the other place will be the best place in which to do that. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Amendment made: No. 8, in page 3, leave out line 21 and insert—
'(2A) Without prejudice to the generality of subsection (2), the Secretary of State may, in pursuance of that subsection—

(a) pay any amount received by him as there mentioned to the British Film Fund Agency for distribution in accordance with section (Final payments by British Film Fund Agency)(1);
(b) arrange for the transfer in accordance with subsection (3) of any right to which that subsection applies.

(3)'.—[Mr. Norman Lamont.]

Mr. Norman Lamont: I beg to move amendment No. 9, in page 3, line 24, after 'company', insert 'or partnership'.

Mr. Deputy Speaker: With this it will be convenient to discuss Government amendments Nos. 10, 11, 13, 16, 17 and 20.

Mr. Lamont: This series of amendments relates to the concern that not enough is known about the structure of the new body. The participants in that body have agreed that the option of a limited partnership would be preferable to that of a company as envisaged in clause 3(3). We see no reason not to accommodate that preference. We believe that that body can meet the needs of the industry perfectly well. These amendments are, therefore, necessary for that purpose.
The intention is that a limited partnership will be established, as my hon. Friend the Member for Hendon, North (Mr. Gorst) identified with his usual perception, under the Limited Partnerships Act 1907, in which each of the participants will be a limited partner and in which

there will be a general partner. The general partner will be formed as a new limited liability company with a nominal share capital owned jointly by the limited partners in their profit-sharing ratios and enjoying only nominal profit-sharing rights.
Although it would be undesirable and unnecessarily restrictive to insist that all the limited partners must be British companies, I believe it is important that the general partner should be a British company, and amendment No. 13 makes provision for this.
These amendments provide a degree of flexibility for the structure of the successor to the NFFC. while continuing to ensure that effective control will remain in British hands. I invite hon. Members to support the amendments.

Mr. Gould: In the previous debate the Minister did not answer some of the questions put by myself and the hon. Member for Hendon, North (Mr. Gorst) about the nature of a limited partnership. Why have the members of the consortium chosen this particular form? Which of them is to be a general partner, and which is to be a limited partner? Is it intended that the members of the consortium should enter a partnership with the limited liability company, or is the partnership to own the company?

Mr. Lamont: I thought that I had given a crystal clear answer. The consortium decided for tax reasons that it preferred to be a partnership. That was done after consultation with, I believe, Coopers and Lybrand about the most suitable vehicle for the members of the consortium.
I thought I had made it clear that the general partner would be responsible for the management of the business. The general partner would be a limited liability company which would be owned by the limited partners.

Mr. Gould: How easily could a limited partner become a general partner and, to some degree, vice versa? Does the Minister have any information on that point?

Mr. Lamont: As far as I know, there is no problem about that. There is the global ceiling of the 20 participants within one consortium to which my hon. Friend the Member for Hendon, North referred. That arrangement can be altered. I would not have thought that there was any problem — even if one has 20 participants — about including other people in the general partnership. Other people might decide to join the partnership on different terms. I should have thought that the general partnership could be enlarged to accommodate other people within it. Not everyone will want to put up the same amount of money or to have the same obligations. It may be that the founding partner will remain as the general partner for some time. I have made it clear that we envisage the consortium being a dynamic body which should grow. We hope that it will attract more money.

Mr. Gorst: I had not intended to intervene in the debate, but my hon. Friend the Minister has raised one doubt in my mind. If there were initially a general partner, that would indicate to me that there was a degree of confidence in the future of the operation. However, if there were adverse circumstances, I would be worried about whether the general partner could suddenly turn round and say, "From now on, I want to be a limited partner." If the general partner did that, I would say to myself, "He thinks that this body will go into the red. He


wants to limit his liability." Will my hon. Friend comment on that? That is not a possibility which any of us would like to entertain.

Mr. Lamont: I cannot bind people in the way that my hon. Friend the Member for Hendon, North implies. He will know—it is written into the heads of agreement—that the consortium has said that it intends that the £1·1 million should be available for three years. That is the limit of the consortium's commitment at the moment. The members of the consortium collectively have said that they intend that that money should be available. We envisage that this body will go on, and we have shown our commitment to it by making it clear that our £1·5 million will be available for five years. I hope that my hon. Friend is reassured by knowing that, after two years, we intend to review the finances of the consortium and how it is working to ascertain whether the arrangements are working precisely as we want them to work for the benefit of the British film industry.

Mr. Gorst: I suspect that the fault is entirely on my side and that the incomprehension rests with me. I had understood that a general partner had an unlimited liability, and that anyone who was a general partner could not limit himself in that way.

Mr. Lamont: No; that is not right, because the general partner will be a limited liability company. To clarify this point precisely with the full benefit of legal advice, I shall write to my hon. Friend and make the position crystal clear.

Mr. Gorst: I should be most grateful if my hon. Friend would do that, because it seems to me that, although the general partner has unlimited liability, it has limited its liability by being a limited company as well.

Mr. Gould: As the point raised by the hon. Member for Hendon, North (Mr. Gorst) is, in essense, the one at which I was driving, will the Minister kindly write to me on it as well?

Mr. Norman Lamont: I shall be delighted to do so.

Amendment agreed to.

Amendments made: No. 10, in page 3, line 26, after 'company', insert 'or partnership'.

No. 11, in page 3, line 32, after 'company', insert 'or partnership'.—[Mr. Norman Lamont.]

Mr. Trippier: I beg to move amendment No. 12, in page 3, leave out line 40 and insert—
'(4A) Where in consequence of any such order as is mentioned in subsection (2) any liability of the Corporation becomes vested in the Secretary of State, the Secretary of State may arrange for the liability to be transferred, on such terms as may be agreed between him and the company or partnership, to any British company or partnership in whose case he is satisfied as to the matters mentioned in paragraphs (a) and (b) of subsection (3).
(4B) In this section—'.
During our discussions in Committee, the Government explained that they intended to pass to the British Screen Finance Consortium the unfulfilled and forward commitments made by the NFFC together with any other cash from the NFFC's assets to meet those commitments. That will mean that film makers who have obtained an agreement from the NFFC to support a particular film need not fear that when the NFFC is dissolved they will be left stranded.
The amendment is necessary to enable my right hon. Friend the Secretary of State to pass such commitments to the consortium. I believe that the amendment is in the interests of film makers and I invite right hon. and hon. Members to support it.

Amendment agreed to.

Amendment made: No. 13, in page 4, line 6, at end insert—
'"British partnerships" means a limited partnership formed in accordance with the Limited Partnerships Act 1907 in which the general partner within the meaning of the Act, or (as the case may be) each of the general partners, is a British Company;'.—[Mr. Norman Lamont.]

Mr. Trippier: I beg to move amendment No. 14, in page 4, line 8, after 'person', insert 'or combination of persons'.

Mr. Deputy Speaker (Mr. Harold Walker): With this it will be convenient to consider Government amendment No. 15.

Mr. Trippier: The purpose of this amendment is to meet the anxieties expressed by some hon. Members that the current drafting of this part of the Bill is not entirely clear. In clause 3, the definition of "British company" is a company over which
two or more Commonwealth citizens are together in a position to exercise control".
However, the definition of "control" speaks of the power
of a person to secure,
by specified means,
that the affairs of the company are conducted in accordance with the wishes of that person.
As hon. Members will be aware, the Interpretation Act 1978 provides that the singular includes the plural. Nevertheless, to give assurance to some hon. Members, and for the avoidance of doubt, we propose that the Bill should be amended to include the words "combination of persons". The amendment is helpful in removing any possible element of ambiguity. I invite right hon. and hon. Members to support it.

Mr. Gould: I am grateful to the Minister for tabling the amendment. The Opposition are delighted to welcome it, but it might be just as well if we were to record the part played by the Copinger Society in bringing the point to our attention and having played some role in promoting this monumental change to the Bill.

Mr. Trippier: I am happy to acknowledge the part played by the Copinger Society.

Amendment agreed to.

Clause 4

FINANCIAL ASSISTANCE BY SECRETARY OF STATE IN CONNECTION WITH THE PRODUCTION OF FILMS

Amendments made: No. 16, in page 4, line 33, after first 'company', insert 'or partnership'.

No. 17, in page 4, line 33, after second 'company', insert 'or partnership.—[Mr. Norman Lamont.]

Mr. Norman Lamont: I beg to move amendment No. 18, in page 4, line 37, after 'person' insert—
'(i)'.

Mr. Deputy Speaker: With which it will be convenient to consider Government amendments Nos. 19 and 21.

Mr. Lamont: The amendments relate to the point that I made earlier on the heads of agreement about the £500,000 which is to be provided for pre-production work. It will enable a proportion of those funds to be used to part finance short films—films lasting less than 35 minutes.
For the reasons that I have given, I concluded that it would be right for part of that £500,000 that has been set aside to be made available for that purpose. The Government envisaged that about £150,000 a year would be used for that purpose. Using those funds for shorts is not thought likely to be to the disadvantage of any pre-production projects.
I understand that in recent years the National Film Development Fund has spent no more than £200,000 on such projects. I hope that that activity will expand in the future, but I do not believe that there will be problems in keeping within the total budget of £500,000. I do not believe that it is necessary for me to give the House any great detail. The hon. Member for Islington, South and Finsbury (Mr. Smith) has a point, but I believe that this decision will be widely welcomed.

Mr. Chris Smith: I rise simply and briefly to give a warm welcome to the amendment and to the Government's commitment to this sector of film making. The making of short films, in particular those made by the workshop sector, is one of the most important and growing parts of the industry, in which a great deal of innovation and talent is at present constituted. Therefore, I congratulate the Government on picking up that point and welcome the amendment.

Amendment agreed to.

Amendments made: No. 19, in page 4, line 40, at end insert

`or'

(ii) for any purpose connected with the production of short films.'.

No. 20, in page 4, line 41, after 'company"' insert', "British partnership"'.

No. 21, in page 4, line 42, at end insert
'and "short film" means a relevant film with a total playing time of less than 35 minutes'.—[Mr. Norman Lamont.]

Mr. Gould: I beg to move amendment No. 34, in page 4, line 44, after 'otherwise', insert
'and shall, by way of grant, be not less than £10 million annually'.

Mr. Deputy Speaker: With this it will be convenient to consider amendment No. 22, in page 5, line 3, at end add
'and he shall lay before Parliament each year a report giving his reasons for providing or withholding financial assistance under this section'.

Mr. Gould: I shall be brief because much of the ground covered by the amendment has been canvassed in other debates this afternoon and in Committee.
I draw the Minister's attention to the statement issued by the six bodies representing the industry in which they make an interesting and valuable comment. They are worried that the money made available to the new consortium will not be adequate. They point out that it will be approximately £3 million per year and that the intention is that that will enable the consortium — as one understands it from its public statements—to finance up to 10 films per year.
I believe that the objective is to provide 25 or 33 per cent. for each project. That means that each project will

be able to attract on average about £300,000 a year. If that is to constitute between one quarter and one third of the total production costs, it means that we are talking about low-budget films — films with a budget of perhaps £1 million or less. In other words, they are films which are essentially meant for television.
The industry is anxious that that money may well be directed into an area which is already more than adequately catered for. We no longer have the benefit of the presence of the hon. Member for Wealden (Sir G. Johnson Smith). As he said earlier, Channel 4 and the television companies have done a great deal in that sector. It suggests that the money made available to the consortium will not go to that part of the film industry where it will be needed. It will not help, for example, films made for the cinema such as "Another Country", "The Dresser", the oft-cited "Chariots of Fire", "Gandhi", "The Killing Fields", and so on.
As my hon. Friend the Member for Islington, South and Finsbury (Mr. Smith) has said on many occasions, that sum will be utterly inadequate to attract into that part of the industry the private finance that is desperately needed. ACTT has instituted a number of inquiries in the City and has said that the answers that it invariably receives are to the effect that approximately £20 million would be required to make investment in films for the cinema viable.
In tabling an amendment which specifies the sum of £10 million only, the House can see that the Opposition's suggestions are modest. That modesty is perhaps not entirely appropriate, given that the financial context in which the industry is likely to operate has been severely turned against it. There is the phasing-out of capital allowances. There is the unhappy decision taken earlier today not to replace the Eady levy. The Parliamentary Under-Secretary has repeatedly reminded us of the business expansion scheme, but that, unfortunately, is simply not suited in many respects to the business of producing films. The hon. Gentleman has offered to talk to the industry about ways in which the scheme could be made more appropriate.
However, many of the financial underpinnings of the industry have been removed. The Government's direct subvention is to take the form of a loan rather than a grant, although we understand the reasons why that is so. Even the £3 million a year that is to be made available to the consortium is likely to be short term, since the obligation is to last only for three years. The assistance is certainly conditional, although, unhappily, that condition seems to have been met this evening. It is to some degree irrelevant in that it strikes at the wrong part of the industry. It is in no sense additional, because the partners in the consortium would spend the money for their own purposes anyway.
There is to be virtually no public money, no recycling mechanism, no tax incentive. No real help is to be provided. The position compares most unfavourably with that in almost every other country that has, or hopes to have, a film industry. As we said on Second Reading, in virtually all the countries where there is a film industry the Government provide the full panoply of aids, incentives, grants and loans. We are simply not doing enough. Indeed, we are hardly doing anything.
I do not hope to evoke any response from the Minister. He is very familiar with the arguments and has not made any suggestion that I regard as adequate. I wish only to


ensure that the industry is aware that the Opposition understand its continuing need for such financial assistance.
Grouped with amendment No. 34 is amendment No. 22 in the name of the hon. Member for Hendon, North (Mr. Gorst). Judging from some of his earlier remarks, I believe that the Minister may be able to offer slightly more comfort to the hon. Gentleman than to us.

Mr. Gorst: I endorse the sentiments expressed by the hon. Member for Dagenham (Mr. Gould). At the heart of our discussions on the Bill, both upstairs and downstairs, is a question. Given that the film industry needs money, where is that money to come from? Will the private sector provide enough? Should the public sector also be involved? The hon. Member for Dagenham was right to argue yet again that the Government should invest more in the industry than they have so far offered to do.
The purpose of my amendment is, in a way, to provide a halfway house between what the hon. Member for Dagenham proposes and the current position of the Government. If accepted in the present or in some similar wording, it would enable Parliament to question the Government of the day about the level of the financial support that they were providing for the film industry. I hope that the Government will accept that we should be given that information annually. They have frequently told us that everything looks rosy. They say that they have done enough. They say that private capital can now take over and that the showing of films on cable and satellite television, the BBC and ITV will provide all that the film industry could reasonably expect. I believe that Parliament will need running proof that that optimistic prediction—which we all hope will be fulfilled — was correct. The amendment will give Parliament a chance to check and assess whether the Government's optimism was justified.
Under the Bill there will, I believe, be no official reports from the film industry to Parliament such as the Cinematograph Films Council's annual report. It would not be unreasonable to ask that we should have some means of receiving information about the progress of the industry.
What do the Government have to fear? If their assessment is correct, and if they have nothing to hide, they have nothing to fear. They should welcome the chance to emphasise the correctness of their predictions. If, on the other hand, those predictions were wrong, Parliament would have a timely opportunity to demand that the film industry should be saved before it is scuppered.

Mr. Ashdown: I shall not rehearse all the arguments that the Minister will have heard in Committee and which have been referred to again by the hon. Member for Dagenham (Mr. Gould) and the hon. Member for Hendon, North (Mr. Gorst). In our view, the Government's current proposal of a loan of £1·5 million over three years is wholly inadequate to meet the needs of the industry as they have been clearly expressed not only by the industry but by other outside bodies. By itself, that sum of money might fund perhaps one medium-budget film. A flourishing industry such as exists at present and such as we should be aiming to retain should make perhaps 12 features and six shorts a year. Of course the Government should not provide all the money, or even the substantial

part of it. However, they should provide enough money to ensure stability in the industry. It is our view that, unless such a sum is dedicated to providing a stable base, there is a real danger that the industry will collapse or that, in its present form, will vanish.
A sum of the order of £10 million would be, as the hon. Member for Dagenham said, fairly modest in comparison with what are believed to be the real needs of the industry, but it would provide an element of predictability on which success could be built.
The Government have nothing to lose. Their predictions may be proved to be right. If they are proved to be wrong, we shall have the chance to put things right before it is too late. If there is a vote, therefore, we shall vote in favour of the amendment.
Bearing in mind the comments of the hon. Member for Hendon, North, I wonder why the Minister has decided not to go ahead. The weight of evidence shows that all other countries do much more to foster their film industries than the hon. Gentleman proposes that we should do. Why does the hon. Gentleman believe that he is right when the body of experience suggests otherwise? I hope that he will address himself to that question.

Mr. Chris Smith: I do not want to repeat the arguments that have been made by my hon. Friend the Member for Dagenham (Mr. Gould) and others, but I fully endorse their views about the inadequacy of the funding arrangements that the Government are making through the new company that is to replace the NFFC. I should like to concentrate on an issue that is marginal to the amendment but which concerns the Government's financial arrangements for the future of the industry—the future funding of the National Film and Television School.
I hope that the Minister can give us some assurances about the funding of the school. He will recall that, in Committee, I asked several questions about the funding arrangements of the school. The matter was followed up by the director of the school in a long and detailed letter to the Minister of 11 January 1985. In that letter, the director concentrated on one crucial issue. In the arrangements that the Minister envisages, there is a gap between the £600,000 from the cinemas and the two television companies and what is presently provided by the television companies.
8.30 pm
The director has asked whether the £200,000 which the BBC and ITV give the school is a replacement for their existing contribution or whether it is additional money. If it is only a replacement, the school will be about £250,000 short on what it needs to run its existing educational work when the Government's proposed financial arrangements come into effect. That is an extremely important issue for the school, which everyone agrees does valuable work. I hope that the Minister will be able to give us some comfort on that count. If he cannot, we must take a dim view of the Government's financial proposals.

Mr. Norman Lamont: I do not believe that the House wants me to go over all of the arguments that we have had at great length about the funding of the film industry. The money that we are making available for the new consortium will be twice that which was available to the NFFC. It is all very well for the hon. Member for Yeovil (Mr. Ashdown) to say that that is not enough, but it is twice what was previously available.
I remind the hon. Member for Yeovil, as he was not a member of the Committee, that the Government are providing £1·5 million for five years and an additional £500,000 for five years for project development work. Another £600,000 will come through the portfolio of rights and interests in about 800 films, and the private sector is putting up about £1·1 million annually for three years. The hon. Member for Yeovil says that the money will partly finance only a limited number of films, but the consortium will have twice the resources of the NFFC and it will operate as the NFFC did.

Mr. Ashdown: Is it not temporary, though?

Mr. Lamont: The hon. Gentleman has asked one question and been given an answer. It is no use his altering the question just because he does not like the answer to the first question.

Mr. Ashdown: Will the Minister give way?

Mr. Lamont: I am very good at giving way, but the hon. Gentleman ought to listen. The Government are supporting the film industry in other ways, such as by giving £7·5 million annually to the British Film Institute and other money to the British Film Year.
The hon. Member for Islington, South and Finsbury (Mr. Smith) mentioned the National Film and Television School. I agree with him about the excellence of that school and its reputation for producing highly skilled film and television programme makers. He will know that it is supported principally by my noble Friend Lord Gowrie, through the Office of Arts and Libraries. The school's budget of about £1·5 million a year is funded only partly by the Eady levy. In the levy year 1983–84, Eady provided only £500,000 and it will provide £600,000 in the current levy year. I hope that the hon. Member for Yeovil is noting this. The balance came from the Office of Arts and Libraries, which provided £850,000 in 1983–84 and £990,000 in 1984–85—a rise of 13 per cent. this year. The grant will be £1·12 million in 1985–86. That is evidence of the Government's commitment to provide as much support to the school as is possible within the constraints of public expenditure.
The arrangements with the BBC, the independent television association and the Cinematograph Exhibitors Association of Great Britain are only in respect of a replacement for the funding that will be lost on the abolition of the Eady levy. However, the arrangements that have been worked out are more than adequate, as they provide sure funding of £600,000 a year for five years. That gives the school greater advance information about its income than was ever possible when it had to go cap in hand seeking funds from the rapidly declining Eady levy. The hon. Member for Islington, South and Finsbury asked whether the ICTA and BBC contribution would be additional to their existing one of £100,000 a year. The answer is "Yes". I hope that the hon. Gentleman will be assured by that.
The British Screen Finance Consortium, as the successor body to the NFFC, is not the whole story of what is happening in the British film industry. There is also the private market. The hon. Member for Dagenham professes to have grown weary of my reminding him of the £36 million that Goldcrest raised for film making. I need not bore him with that information this time, because I noticed in the newspapers recently that Thorn-EMI is talking of a

financial vehicle of some £100 million for film making. It is possible within the tax regime to raise money for film making. I believe that the markets are becoming more responsive and interested in film making. There is also greater awareness in the City. Companies that have a spread of risk and a portfolio of films are finding it possible to raise money.

Mr. Ashdown: The Minister mentioned Goldcrest. We all know that one third of the money that it raised to make "Chariots of Fire" came from tax allowances, which the Government have now abolished. In 1983, the Government also abolished the exhibitors' quota. We are not considering the £10 million in isolation. What the Government are proposing is in line with their abolition of tax allowances and the exhibitors' quota. As to the question that the Minister pretended that he answered earlier, he is now substituting a temporary system for a permanent one.

Mr. Lamont: I have met the managing director of Goldcrest. It would be improper for me to say what happened in our discussions, but I do not believe that the change in the capital allowances regime will make life very difficult for companies such as Goldcrest and Thorn-EMI which are raising larger amounts of money and spreading their risk over a series of films. The evidence shows that they will still be able to raise the money. In privacy many people have said to me that the changes in capital allowances will not have the much-vaunted damage that some people believe. I accept that there is a legitimate concern by independent producers who may have benefited from other people's capital allowances, but these large companies will still be able to thrive and the extra money that we are making available to the son of NFFC will do a lot to encourage British film makers.

Mr. Ashdown: Will the Minister answer "Yes" or "No" to the question whether a third of the money that Goldcrest put into "Chariots of Fire" came from tax allowances which are now abolished?

Mr. Lamont: It is not for me to answer for the internal financial arrangements of Goldcrest. I have told the hon. Gentleman what I believe to be its view about the current regime in which it will operate.
My hon. Friend the Member for Hendon, North tabled amendment No. 22, and I appreciate and understand what led him to do so. However, I cannot accept it in its present form because I am advised that it would require the Secretary of State to lay annual reports before Parliament, which listed all payments made to the British Screen Finance Consortium and also every application received for assistance towards the development of film projects. Because I recognise that there is a case for a statement to Parliament — it would probably be the general wish of the House that information should be made available about the sums advanced by the Government to the consortium, and the operation of the project development scheme—I am prepared to agree that there should be a brief report of these each year. I would certainly arrange for that.
For the reasons that I have given, I should not like to accept the wording of my hon. Friend's amendment.

Mr. Gorst: Will my hon. Friend explain whether he means by that that he will insert some suitable wording into the Bill when it goes to another place, or is it merely


a gentleman's undertaking that year by year or at suitable intervals he and his successors will spill the beans to Parliament?

Mr. Lamont: It is just my undertaking to the House that we would give a report each year on the operation of the consortium and the development fund.

Mr. Gould: I am disappointed, though not surprised, that the Minister has not moved on this point. He has heard the arguments on many previous occasions, and has been equally difficult. Since I see little chance of persuading either the Minister or his absent colleagues to accept what I believe is an overwhelming case, I have little option but to accept the small crumbs of comfort offered regarding amendment No. 22 and, to a limited degree, to my hon. Friend the Member for Islington, South and Finsbury (Mr. Smith) in respect of the National Film and Television School. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 6

REPEALS, ETC.

Mr. Trippier: I beg to move amendment No. 23, in page 6, line 1, before 'is' insert 'a film which'.

Mr. Deputy Speaker: With this it will be convenient to take Government amendment No. 24.

Mr. Trippier: The purpose of these amendments is technical. It is to meet the concern expressed by some hon. Members that this part of the Bill is ambiguous and may not achieve the desired result. The use of the past tense might be interpreted as meaning that all new films made after the Bill came into force would not have a 50-year copyright. The effect of the amendments is that all films which are published after the Bill will fall under section 13(3)(b) of the Copyright Act 1956 which provides that in the case of films not registered under part II of the Films Act 1960 copyright shall run for 50 years from the end of the calendar year in which the film was first published.
That brings United Kingdom legislation into line with the Berne convention, which by article 7(2) provides a minimum term of copyright of 50 years from first public showing. The change complies with the recommendation made by the Whitford report on the law of copyright and design 1977 at paragraph 50(iii)(a). These amendments improve and clarify the current drafting in the Bill, and I invite hon. Members to support them.

Amendment agreed to.

Amendment made: No. 24, in page 6, line 2, leave out `was not so registered' and insert 'any other film'.

Mr. Trippier: I beg to move amendment No. 25, in page 6, line 23, leave out from 'would,' to end of line 24 and insert
`but for the repeal by this Act of the Films Act 1960 and the Films Act 1970, be—'.

Mr. Deputy Speaker: With this it will be convenient to take Government amendment No. 26.

Mr. Trippier: The purpose of these amendments is to meet an assurance given during the discussion of the Bill in Committee. I explained that the Government were

concerned that film makers who were already making films should not be disadvantaged by the changes to the law proposed by the Bill. One problem which we identified, and which the amendments seek to resolve, concerns films completed after enactment of the Bill but exhibited in a cinema before the Eady levy is abolished by an order made under clause 2(4). On enactment the provisions concerning registration in the Films Acts 1960 to 1980 will be repealed. Thus no film may be registered as a British film after that date. Such a film—there may be many—would thus be deprived of the opportunity to receive any moneys from the final Eady distribution, although it may be shown during the final levy period and achieve a large box office success.
Clause 6(4) as presently drafted provides for films eligible for payment from the Eady fund to be entitled to such payment after the enactment of the Bill. We wish to go further and to extend the provision to include all films which, but for the repeal of the registration provisions in the Films Acts of 1960 to 1980, would have qualified for registration and thus have been entitled to a share of the distribution of the Eady fund. All hon. Members will share our view that this step will give benefit to film makers. I invite the House to support these amendments.

Mr. Gould: Opposition Members are grateful to the Minister for carrying out his undertaking in this way.

Amendment agreed to.

Amendment made: No. 26, in page 6, line 31, leave out from 'repeal' to end of line 32 and insert
'of the said Acts of 1960 and 1970.'.

Mr. Trippier: I beg to move amendment No. 27, in page 6, line 40 at end insert—
'(5A) Where—

(a) a contract for the production or acquisition of a master negative, master tape or master disc of a film has been entered into before the commencement of section 5 of this Act; and
(b) any person, having incurred expenditure in pursuance of the contract (before or after that commencement) on the production or acquisition of the negative, tape or disc, makes an application under paragraph 2 of Schedule 1 to this Act with respect to it,

that person may by notice in writing require that the question whether the negative, tape or disc ought to be certified as a qualifying film, tape or disc for the purposes of section 72 of the Finance Act 1982 shall be determined by the Secretary of State in accordance with the law in force immediately before the commencement of section 5 in like manner as if his application had been a request for certification made under section 72(8).
Any expression used in this subsection has the same meaning as it has in paragraph 2(1) of Schedule 1 to this Act.'.

Mr. Deputy Speaker: With this it will be convenient to take Government amendments Nos. 28 and 29.

Mr. Trippier: The purpose of these amendments is to fulfil an assurance given during our discussions in Committee to introduce a transitional provision to cover films completed after the enactment of the Bill but where the contract for the making of the film was entered into before the Bill came fully into force.
We are concerned to avoid any disadvantage or hardship that might be caused by the timing of the Bill. The amendment is therefore drafted to cover the circumstances of a film that would have been entitled to certification and so to tax relief under section 72 of the Finance Act 1982 if it had been completed before the Bill became law but is in fact completed after the Bill is enacted and cannot meet the criteria in schedule 1 and so is not eligible for certification.
There will be few cases, if any, where that may happen, because the criteria in schedule 1 are generally similar to those under the existing law. However, an instance could arise in relation to paragraph 5(1)(c) of the schedule, which provides that a film should be excluded from entitlement to certification if more than 20 per cent. of the photographs taken or sound recordings made were made outside the United Kingdom. Under existing law such films are eligible as British films to reduced payments from the Eady fund, but under paragraph 5(1)(c) of schedule 1 they will no longer be regarded as British films and will not be entitled to the benefit of United Kingdom tax allowances.
The amendment is needed to cater for such rare but possible circumstances. It provides that, where a contract for the production or acquisition of a film is entered into before the Bill is in force in its entirety, the maker or acquirer of the film may opt for certification for tax relief to be based either on the old law or on schedule 1 to the Bill. The amendment makes clause 6(7) unnecessary and, as indicated in Committee, it can be removed. Hon. Members on both sides of the House will wish to ensure that, in the circumstances I have outlined, film makers do not suffer financial disadvantages as a result of the enactment of the Bill, and I therefore invite them to support the amendments.

Amendment agreed to.

Amendment made: No. 28, in page 7, line 1, leave out subsection (7).—[Mr. Trippier.]

Clause 7

SHORT TITLE, COMMENCEMENT AND EXTENT

Amendment made: No. 29, in page 7, line 13, at end insert 'and (5A)'.—[Mr. Trippier.]

Schedule 1

CERTIFICATION FOR PURPOSES OF SECTION 72 OF FINANCE ACT 1982 IN CASE OF BRITISH FILMS

Mr. Trippier: I beg to move amendment No. 30, in page 8, line 24, at end insert—
'"sound recording" means a sound recording which is either an original recording or a re-recording;'.

Mr. Deputy Speaker: With this it will be convenient to take Government amendment No. 31.

Mr. Trippier: The amendments are designed to allay anxieties expressed in Committee that the omission of the word "re-recording" from schedule 1 could leave a loophole in deciding the eligibility of films as British. As some hon. Members will be aware, in film production many scenes are shot in film studios. In smaller studios it is usual for the sound for each scene to be recorded at the same time as the photographs are taken, such studios being designed and equipped specifically to allow that, but on large studio sets — for example, those used in James Bond films—it is impossible to take high quality sound recordings synchronously with the photography. A recording is made, but only as a guide for later use.
Once a film has been edited into near-final form, it is taken to a specialist sound studio where a new sound recording is constructed, using the original actors speaking while watching their lips move on a monitor screen, and with special effects engineers adding background noises

—these are visions of scenes to come when the House of Commons is televised — such as storms, gunfire and footsteps. That process is known in the industry as re-recording, and is distinct from recordings taken when photography is done.
There have been some problems of definition in this area, in that although makers of British films have had to comply with the rules on labour and studio use, re-recording sound was not mentioned in the rules, and therefore a film producer could undertake re-recording in a foreign sound studio with foreign labour and with no adverse effect on the film's eligibility as British.
In Committee the view was expressed that the word "re-recording" should be included in the Bill to make it clear that that loophole would be plugged. I said then that the reference in the schedule, to recording sound covered re-recording, but that I was content for it to be made clear, and the Bill was amended accordingly. However, the location of that amendment is defective, because it relates only to a specific part of the schedule—paragraph 1(2)—not to the entire schedule. Therefore, we have tabled an amendment which we believe not only meets the concern expressed by hon. Members in Committee, especially my hon. Friend the Member for Gravesham (Mr. Brinton), but further improves schedule 1. I invite hon. Members to accept the amendment.

Amendment agreed to.

Amendment made: No. 31, in page 8, line 32, leave out `(which shall be deemed to include re-recordings)'. — [Mr. Trippier.]

Mr. Norman Lamont: I beg to move, That the Bill be now read the Third time.
It is a sad reflection that in the brief period of six months since the White Paper was published at least 18 cinemas, with a total of 36 screens, will have closed. An important part of the Bill's provisions was to end the Eady levy as soon as possible, because the health of the cinema industry is vital to the health of the film production industry.
The Bill will lift from the distribution and exhibition sectors a raft of controls and regulations which are now out of date. It is unlikely that any steps open to the Government could reverse the trend overnight and bring back the enormous cinema audiences of the 1950s, but in abolishing registration, licensing and the quota the Bill will at least remove an unwanted and useless financial and administrative burden.
More positively, the Government support the film industry's initiative in the forthcoming British Film Year. This year is intended not as an exercise in nostalgia but as a celebration of the modern British film industry. My hon. Friend the Member for Richmond and Barnes (Mr. Hanley) reminded us that, as part of British Film Year, several companies will modernise and invest some of their cinemas. Such steps are vital if we are to get people back to the cinema.
Another measure that is extremely important in relation to the cinema industry, and thus to the film industry, has not featured in our debate today, but I believe that the hon. Member for Dagenham (Mr. Gould) recognises as important the Government's plans to carry out an experiment to investigate the effects of relaxing the barring arrangements which many independent cinemas claim deprive them of fair access to profitable films. As I said


earlier, the hon. Gentleman might ask, why have we not gone further and made an order covering the entire country? We must take into account the precarious position of the cinema industry, and I hope he agrees that an experiment is the sensible way forward. I agree entirely with the point that he made in Committee that competition in the cinema is important. Had there been greater competition 15 or 20 years ago, the industry might not have so many problems today. I shall watch the outcome of the experiment with great interest.
The Eady mechanism used to make a substantial contribution to film production, but those days are long gone. The amounts going to British film makers fell from £4·6 million to £2·7 million in 1982–83, and were almost certainly less in 1983–84. In short, as a general production support, the Eady levy has shrunk into minor significance. That does not mean that the pool of available funds for production in Britain has shrunk in the same way. New names have appeared. Channel 4, with its programme of financing films intended for cinema and television showings, now invests £8 million a year in film production. The video sector, which for much of its history was the beneficiary of decades of film making, is beginning to face the need to invest in new products.
In 1984, 53
theatrical features were produced in the United Kingdom or made by British crews … This is 11 films more than in 1983 and relects the continuing buoyant state of the United Kingdom film industry.
Those are not my words; they come from "Screen International", one of the leading trade journals. The article, which appeared just before Christmas, continues:
This film making activity represents production investments of over £200 million compared to the £180 million in 1983.
To those who say that those achievements were due to capital allowances or to the effect of the dollar exchange rate, I would pray in aid some of the recent attempts to raise finance for production by Goldcrest and Thorn-EMI. It has been demonstrated clearly that money can be raised in the market for British films. Nevertheless, during today's debate there have been calls for injections of further financial aid to the film industry, either of taxpayers' money or by way of a levy, which is simply a tax by another name. Of course, we recognise that there is an area of film making which is as unlikely to be self-supporting as are ballet, opera, or any of the activities that contribute to the cultural life of Britain. That is why my noble Friend the Minister for the Arts supports film production through the British Film Institute.
It is against that background—the support that we are giving to the commercial sector and the neo-commercial sector through the new consortium that we are supporting and the support that is given by my noble Friend the Minister for Arts — that on the one hand we have rejected the demands of those who advocate general support for the production industry and on the other have considered the needs of those activities which have until now been funded by the Eady levy. The first of these was the British Film Institute production board. Here the Government have enforced the recommendation of the Cinematograph Films Council, but in this final year of the levy the BFI should receive out of the levy a discretionary payment equivalent to three times its expectation based on the recent past. This will give a breathing space to the BFI

to find an alternative source to make up for the former Eady contribution. Its main funding will, of course, continue to come from my noble Friend.
The second activity for which discretionary payments from the Eady levy have been made is the National Film and Television School, to which the hon. Member for Islington, South and Finsbury (Mr. Smith) referred earlier. I gave him an assurance on the specific question that he put to me. I know, of course, that the school has reservations about the adequacy of its future funding. I am considering its position in the light of a meeting that I had the other day with the school's director. As I explained in reply to the earlier amendment, I believe that the £600,000 that has been made available will give it a degree of security.
Thirdly, and most important, the Government have heeded the arguments of those who pressed the case of the National Film Finance Corporation. Here, it is said, we are talking about the risky end of the commercial sector, the young and untried talent making the low and modest budget feature films. It is a measure of the Government's recognition of the NFFC's unique importance that we have been extremely careful to find a way of securing its functions when its means of support vanish with the demise of the Eady levy. I believe that the arrangements that we are making with its successor, the British Screen Finance Consortium, offer an excellent prospect of carrying on the traditions of the NFFC. That is what the Government tried to enshrine in the heads of agreement that we placed before the Committee. We tried to build in safeguards to ensure that Government funding will be used in conjunction with the private sector to support new talent, and to encourage the development of young producers in the country. I believe that all the partners in the new consortium are dedicated to that same purpose.
The Bill does not, of course, solve all the problems that confront the film industry, but sweeping away the controls and enabling the cinemas to be realeased from the Eady levy is, I think everybody will agree, urgently needed. At the same time, the transition to the new consortium will provide a means of concentrating Government assistance to the commercial film industry where it is needed. I believe that that new body, based on the memorandum that we have examined today, will carry on those traditions and contribute to the unique film industry that we have in this country and which we very much want to maintain.

Mr. Gould: We stand on the threshold of British Film Year, as the Minister said. British Film Year is meant to be a celebration of British film, but I believe that the Bill means that those celebrations must be muted and that the prospects for the industry are worse than they need have been.
The Bill is a missed opportunity. I am afraid that its deficiencies have been exacerbated by the decision taken earlier to remove the levy on television companies. The abolition of the Eady levy, as the Minister rightly says, was the agreed starting point for the Bill. I think that nobody disputes that the Eady levy has had its day. We are sad, however, because the abolition of the levy could have been used as an opportunity to put the industry on a new long-term and sound footing.
I believe that instead the Government have used that point as a pretext for dismantling, largely on ideological grounds, the structures of financial and institutional


support which have so far kept the British film industry alive and kicking. The difficulty is that the risks which now stand in the way as a result of the Bill may well prove to be fatal. I trust that that will not be so. If the industry survives those risks and we still have a British film industry, it may be for a returning Labour Government to remove the risks and create the climate in which the industry can survive and prosper.

Mr. Gorst: I have asked myself what sort of Bill we have been spawning, and I am sorry to have to say that I believe that it is now devoid of any meaningful financial provision for films, having suffered a debilitating hysterectomy earlier this afternoon. It leaves the future of the industry to a mixture of optimistic and pious predictions by my hon. Friend the Minister.
The original parents of the measure have long since divorced themselves from the responsibility of the upbringing of their progeny, and the new foster parents — in the shape of my hon. Friend — have proved well-meaning and most courteous in replying to all our inquiries. However, in the purely political sense, I have to say that I believe that they have shown themselves to be impotent to make adequate provision for their recently acquired charge, the British film industry.
Therefore, I cannot welcome the Bill, now in its, so to speak., polished form, with anything more enthusiastic than a whimper and expressions of regret and doubt. I believe that the Government should ponder upon the implications of their attitude. The film industry in this country is not a weakling art form appealing to an impecunious elite; it has cultural aspects that justify national support, partly because it enhances the understanding of our way of life overseas and partly because it communicates in a manner and with a force that can be not only breathtaking and entertaining but economically profitable.
Throughout the centuries, various geniuses of music, painting, opera and ballet have come to expect—and the nation that has housed them has accepted the responsibility—the nation to act as a patron of those arts. There is no substitute in the commercial world for the patronage of the state in those areas. The film industry blends commerce, communication and culture and is, in my view, entitled to expect similar treatment.
It seems that with the Bill the Government are abandoning the industry to the vagaries and uncertainties of an artificially fettered market. Indeed, they are also denying it fair access to the sustenance of multi-million audiences. That is what the Government seem to be doing through their policies enshrined in the Bill.
However, I conclude by hoping profoundly that every negative word that I have uttered, every critical thought that I have spoken, and every doubtful prediction that I have postulated will be disproved by events and will be totally untrue. I hope that I shall be wrong and that the optimistic Ministers who people the Government Front Bench will be resoundingly vindicated by the great benefit that their actions will have bestowed upon a valuable and talented British film industry.

Mr. Ashdown: To use the words used by the hon. Member for Dagenham (Mr. Gould), this is another in the catalogue of the Government's lost opportunities. The

Government are capable of correctly assessing and analysing some of the ills at the heart of Britain, but then come up with an answer that is so ideologically dominated that it is inappropriate. The Minister may shake his head, but he has heard the same message as effectively from Conservative Benches as he has from Opposition Benches. Even if he takes no account of what we say, perhaps he will take account of his hon. Friends, who have been saying the same thing consistently.

Mr. Norman Lamont: The only thing at which I was shaking my head, which I have done consistently and I hope for the last time, was the latter point. We may have got this right or wrong, but we have not been motivated by ideology. We had to deal with the Eady levy, and when the Eady levy ended we had to reconstruct the NFFC. Our motive is dominated by responding to this situation.

Mr. Ashdown: I hear what the Minister says, and, having debated with him before, I will take it at face value. However, that is the only logical conclusion that some of us, and perhaps some Conservative Members, can come to when we regard the opportunities open to the Government and the extraordinarily illogical way that they have gone about them. As I have not found any logic in the Government's system, I can only come to the conclusion that there must be other driving forces. Perhaps the Minister will forgive me for such a mean thought, which persists in my breast.
The Minister is right to assess that the support structure for the industry is in need of reform, and he is right to say that the Eady levy needs to be replaced by a new mechanism. However, the Government's chosen mechanism will not lay down the basis for a new, long-term support structure within which the industry can grow, but will do something different. The Government have made funding of the industry the prey of a market place in which there are only two buyers—the television companies. In the end, whatever they may be doing now, they are bound to operate, whether formally or informally, in a way that will diminish the fair price that they pay for the goods that the film industry has to offer.
The Minister accepted that this is an imperfect market place and that the job of the market place is to determine demand and so allow things to develop in accordance with demand. However, he has turned down a mechanism that would have compensated, and would have provided a levy to the film industry based on the demands of the public. I thought that that was what the Government were all about.
Unhappily, the Bill cannot even be taken in isolation. It is the third in a series of body blows administered to the industry. In 1983 came the abolition of exhibitors' quotas, then last year the end of tax allowances, and now a Bill that takes away an albeit inadequate system of support and replaces it with nothing effective.
It is a supreme irony, as other hon. Members have said, that in British Film Year the Government have laid down the basis for a bleak and uncertain future for the industry. The industry depends on investment and on people taking risks, and people putting money on uncertain things. The kind of climate generated by these three measures will diminish the industry and weaken it, if not destroy certain sections of it.
This is a bad Bill and my party will be voting against it tonight.

Mr. Brinton: The hon. Member for Yeovil (Mr. Ashdown) was not with us in Committee, and I was reflecting as he spoke that one of the good things about the discussions on the Bill was the constructive and friendly approach of my right hon. and hon. Friends on the Front Bench, who have listened to the arguments, albeit while disagreeing.
I have my reservations about how far the Bill has gone. I have spent a great deal of the time that I have been contributing in a small way to these debates trying to make it plain that there is a basic difference between film made for the cinema and film made for television. My hon. Friend the Member for Hendon, North (Mr. Gorst) referred somewhat hesitantly to a Bill that might be polished — I suggest that it has room for considerably more polishing in the other place. One of the big problems faced by the Bill and the Government is that over the years there has been a slow getting together of the cinema film and the television film, but the two have not yet married up. Therefore, in a sense, the Bill is reflecting something that is changing all the time and will not remain constant for long enough to be of value.
There is no doubt in my mind that the most useful thing that we could get is what we have not so far had from my hon. Friend. The Government have had to introduce certain reforms because the Eady levy was out of date and not doing its job. They have chosen the path set for them by the television lobby and have not supported the feature film. That is a different animal. One of our small achievements during the course of the Bill has been to get the whole of the film industry united around one statement: that the polishing will continue elsewhere.

Mr. Gale: There will be three rousing cheers tonight in the Carlton cinema, Westgate-on-Sea, and in many small cinemas around the country about the abolition of the Eady levy. The industry needed that little shot in the arm. On their behalf, I thank the Government for it and I welcome it.
I agree entirely with my hon. Friend the Member for Gravesham (Mr. Brinton) that the Ministers have listened patiently to the arguments and have put a great deal of hard work into the Bill. As a result, it leaves this House a better Bill. Earlier this afternoon we may have lost a skirmish. However, there will be an opportunity in another place to look again at the Bill. I know that my hon. Friends will listen to the arguments and will look again at the Bill. The Government have reaffirmed their support for a British film industry making good British films that will be shown in British cinemas and on British television. Therefore, warts and all, I welcome the Bill.

Question put and agreed to.

Bill accordingly read the Third time, and passed.

Orders of the Day — Shipbuilding Bill

Not amended (in the Standing Committee), considered.

New Clause 1

COMMENCEMENT

`This Act shall not come into force until an order made by the Secretary of State has been approved by a Resolution of the Commons House of Parliament.'.—[Mr. Geoffrey Robinson.]

Brought up, and read the First time.

Mr. Geoffrey Robinson: I beg to move, That the clause be read a Second time.
What we at first thought was an innocuous Bill has during the course of Second Reading and Committee emerged quite clearly as a Bill that needs our close attention. Therefore we have put down for consideration this evening a new clause upon which we intend to vote. Far be it from me to delay the proceedings of the House at this hour, but the purpose of the new clause is to bring home to the Government the need for a new clause to establish both the new British Shipbuilders redundancy payment scheme and a scheme for those yards that are to be privatised before December 1986 when the existing shipbuilding redundancy payment scheme comes to an end once and for all.
We have made it clear that we shall not vote against the Bill on Third Reading. We have equally made it clear that we do not agree with the truncating of the scheme to an extension of only 18 months. But we do not agree that this should be done before the successor scheme has been established by British Shipbuilders. We do not agree that the Government should, with such commercial irresponsibility, write off all the financial liabilities of those yards that are to be privatised while at the same time not requiring them to meet conditions relating to maintenance of employment and conditions for its termination at least equal to those prevailing under the present scheme. Least of all do we agree, because of the uncertainties still surrounding the industry, that this is the right time to terminate this legislation which by the Government's own reckoning has worked so well. As the Minister of State said on Second Reading:
No one would dispute that the scheme has contributed significantly over the years both to the alleviation of the problems of redundancy in a contracting industry and to progress in relation to the problems of contraction itself. It has provided a valuable tool in the management of change within shipbuilding and has helped in an extremely difficult period".—[Official Report, 9 January 1985; Vol. 70, c. 790.]
The time remains extremely difficult, and this is no time to end the scheme with the final and unchangeable deadline announced by the Government, a scheme that has helped to mitigate the hardship of thousands of shipworkers whose livelihood has been wrecked by the Government.
The truncated period might also lead to a haemorrhage of skills, leading to an unbalanced labour force. When the scheme was introduced by my right hon. Friend the Member for Manchester, Gorton (Mr. Kaufman) in 1978, the Minister of State, then a junior Opposition spokesman, said:
The result of many redundancy schemes has been that some firms have been left with a labour force which is unbalanced".


If the Bill goes through tonight with the deadline of December 1986, we shall, in all probability, see precisely that adverse effect achieved.
The House will realise that the tightness of the money resolution has prevented us from putting the many amendments that we would have liked to modify the Bill. Nor have we attempted, for the reasons that I gave, to wreck it. But in moving and voting on the new clause tonight we wish to expose the irresponsibility and hypocrisy of the Government, and the Minister of State in particular.
Again in Opposition in 1978, the Minister of State said that he wished to extend the scheme that we were introducing for the nationalised sector of the industry to what was then going to be a small sector of ship repair yards only. He said that the same scheme should apply to them because it was Government financed. He said:
I make this point because there is some concern in the small private sector … that the terms of the Bill will have an adverse effect on them … If that is the case, is it not worth considering whether the scheme proposed in the Bill should not have been an industry-wide scheme rather than confined to British Shipbuilders?"—[Official Report, 16 January 1978; Vol. 942, c. 181–85.]
Indeed, so firmly did the Minister become convinced of that concept of parity between public and private sectors that he took the point to another place. He succeeded there in having amendments agreed to, the effect of which would have been that the private sector repair yards would have been included within the state scheme. That would have been impossible, as he then well knew, because our deliberations in the House are governed by a money resolution, as they are not in another place. That tactic, Mr. Speaker, pursued with a speciousness and irresponsibility that did not become him, was correctly ruled out of order by your illustrious predecessor, Mr. Speaker Thomas, on 27 April 1978.
For that reason and others, we have not seen fit to try to take the matter to another place, although it is worth noting in passing that the Government have been defeated there no fewer than 79 times. However, that would be a futile exercise and a waste of the time of this House since on return to the House you, no doubt, Mr. Speaker, as did your predecessor, would have ruled any such amendents out of order.
But we must still put to the Minister and the Government those arguments that strongly make the case that the Government should first see that a new and equally good scheme, as promised by the Minister of State, is established before the Act comes into force. On Second Reading he said:
However, at this stage there is no need to worry that the work forces may end up worse off."—[Official Report, 9 January 1985; Vol. 70, c. 793.]
I take that to be the work forces in what will remain the public sector and in the private sector.
That, for us, is a commitment, and we would have wished that commitment to have been clearly evidenced to the House by way of a new scheme presented to it, or even presented outside the House, but nevertheless for such a scheme to have been negotiated between BS and its employees, and, indeed, between those yards that are privatised or that are being privatised and their work forces.
True to his word, the Minister should have seen to it that such a scheme was forthcoming. It was just as

important that that should have been negotiated for the private sector as for the public sector, which, we have his commitment, will be no worse off.
Regarding safeguards for the private sector, which the Minister of State was so anxious to obtain back in 1978, there is no question of these being given by the Government now. Although the scale of the problem in the private sector if and when these yards are denationalised is going to be much greater, it was already pre-empted on Second Reading, by the Minister of State who had done a U-turn in the most classic fashion, when he said, contrary to what he was urging us to do in 1978:
I am quite clear that an extension to the private sector would be the wrong solution." [Official Report, 9 January 1985; Vol. 70, c. 793.]
That would be an extension to the private sector of whatever scheme British Shipbuilders are able to agree with their work force.
We are now without any undertaking of a specific and clear nature with regard either to British Shipbuilders or to the yards that are so irresponsibly to be flogged off. We are talking of the great names in the industry, such as Barrow, with some 12,000 unemployed, Yarrow, Swan Hunter and Vosper, totalling perhaps as many as 30,000 employees of whom the Government have washed their hands.
In refusing, then, to accept new clause 1 tonight, if that is the case — and we shall listen with great interest to the Minister's reply, although I fear that it will almost certainly be no — the Government will make it unmistakably clear to the employees of British Shipbuilders and those in the military yards to be privatised that they have abandoned a vitally important aspect of their commitment to them. The result could well be a haemorrhage of redundancies while the present scheme still lasts in those very skills we need to sustain a shipbuilding capability at all in this country. It will also mean, of course, a further acceleration in the economic decline of those regions of our country that have historically suffered so tragically from economic decline and social impoverishment.
We believe that that could be avoided. We urge the Government to agree to this new clause, which would entail the need to bring an order before this House making the position quite clear. That is all we are asking of the Government and I ask them to consider it very carefully. The purpose of the new clause is to enable the Government, before the Act comes into operation, before December 1986, to put before the House precisely what, with their guidance and under their instructions — for they have already written to the chairman of British Shipbuilders — has been negotiated by way of a new redundancy scheme between British Shipbuilders and its employees.
We should also like to know, and the House is entitled to know, what has been negotiated, if the privatisation measures go through, between the new owners and their employees. We believe that the uncertainty and despair that this legislation is likely to cause could be avoided. For these reasons, we urge the Government to accept new clause 1 to reassure the industry, public and prospectively private, that it has a future. If they do not, we and the shipbuilders can only fear the worst — fake assurances from a fake Department that cares nothing for the welfare of the working people and a nationally and regionally important industry.

Mr. Don Dixon: I support what was said by my hon. Friend the Member for Coventry, North-West (Mr. Robinson). The Minister, the Parliamentary Secretary and the Minister of State have said on a number of occasions that the shipyard workers have nothing to fear, that the new scheme will be as good as if not better than the present one. If that is so, they should accept the new clause.
I, too, would like to quote the Minister of State, who was then the Opposition spokesman on shipbuilding. When we were discussing the original Shipbuilding (Redundancy Payments) Bill he said:
The other point that I, would make, particularly following what the Minister said when he talked about a once-and-for-all situation, is that achieving competitive levels of manning is something that we have to go on doing all the time. We tend to look at Japanese steelworks or German shipbuilding firms and think about making an adjustment to get down to their level of manning, but this is a process that ought to go on all the time.
That is precisely why we say that the shipbuilding redundancy scheme should continue.
9.30 pm
The Minister says that by December 1986 the shipbuilding industry will have negotiated a scheme that is as good as, if not better than, the present scheme. The Minister of State, then Opposition spokesman, said in the debate on 16 January 1978:
One reason for this, and this brings me back to an earlier point about what happens in one industry affecting what happens in another, is that workers in British Shipbuilders and the unions there must have read the newspaper stories about the sorts of sums being paid to buy out redundant jobs in the British Steel Corporation".—[Official Report 16 January 1978; Vol. 942, c. 179–182.]
In Committee we spoke of concern about the fact that shipbuilding workers receive less by way of redundancy payments than the steelworkers or the sums paid by the British National Dock Labour Board, and they get less redundancy than the mineworkers.
It is clear that what happens in one industry affects what happens in another, and that should be heeded by the workers in other nationalised industries. They should realise that the way in which the Government are ending the shipbuilding redundancy scheme could happen to the schemes applying to the steelworkers, dockers and mineworkers in the not too distant future, when the Government feel that the time is right.
In Committee the Minister said that there was no need to fear that after 1986 workers in the private or public sectors would be any worse off. If he believes that, he should accept the new clause. On Second Reading, the Minister said that compensation was a subject for negotiation, and, as my hon. Friend the Member for Coventry, North-West pointed out, shipbuilding workers should not lose out.
Somebody once remarked that there was no need to look in the crystal ball if one could read the book. It is clear that shipbuilding workers who have negotiated outside the shipbuilding scheme have not achieved the equivalent of shipbuilding redundancy scheme payments, and one needs only to look at Tyne Shiprepairers for proof of that. That company was privatised and the men were bought out under the scheme applicable then for half their entitlement under the shipbuilding redundancy scheme. Scott Lithgow workers will not get their full entitlement. In other words, the remarks that Ministers are making are, to say the least, slightly misleading because workers who have already negotiated redundancy payments have not been able to



achieve the same terms as were negotiated by the Labour Government in 1978. That is why the new clause is necessary.
If the Minister is so certain of what will happen when the scheme comes to an end in 1986 and renegotiations take place, there is no reason why he should not accept the new clause. It will ensure that when the new scheme is negotiated it will be brought before the House for debate. Then, if hon. Members are satisfied, the Government will have the full backing of the House for their actions.
At present, workers in the shipbuilding industry know what is likely to happen. Come December 1986, they are sure that they will be finished with the shipbuilding redundancy scheme and that the negotiations which they will have with the companies will not produce terms as fair to them as the terms that were introduced by the Labour Government.
In Tyne and Wear there are 72,000 men out of work, more than 35,000 of them having been unemployed for over 12 months. When 2,100 voluntary redundancies were asked for, more than 2,400 volunteered. They volunteered only because they were convinced that the Government would be bringing the shipbuilding redundancy scheme to an end in 1986.
If the Minister is genuinely concerned for the shipbuilding industry, he will accept what we propose. After all, the management does not want the scheme to end. They are aware of the problems that will arise, and it is nonsense for the Minister to say that all will be well under a voluntary redundancy scheme. It is not a voluntary redundancy scheme, because management determines who is made redundant. If all the platers in a yard asked for redundancy, the management would not give it to them. The same would apply if all the joiners opted for redundancy. The management picks out individuals, so it is nonsensical for the Minister to say that it is a voluntary redundancy scheme.
If the cut-off date for the redundancy scheme is December 1986, the platers could finish the steel work on a ship and be given redundancy payments under the scheme, while joiners, electricians and other finishing trades working on the ship at a later stage could lose the advantages to be gained under the scheme because the work continued beyond December 1986. The new clause is designed to restore some confidence, but perhaps "confidence" is the wrong word, because shipyard workers do not want a redundancy scheme, let alone to have confidence in it. Instead, they want confidence in the industry.
On Second Reading the Minister talked about 35,000 workers in British Shipbuilders having benefited from the redundancy scheme. That means that 35,000 men have benefited by being thrown on the human scrapheap. That is an example of the nonsense that is spoken by Ministers. These men have been made redundant in areas where there is no chance of getting a job if they are over 35 or 40 years of age. As I said in Committee, to say that men have benefited by being made redundant is rather like Pierrepoint saying that everyone he hanged benefited because the trap door always opened.

Dr. Norman A. Godman: Does my hon. Friend agree that one of the major implications of the Bill is that those in the shipbuilding industry will be taken back to the bad old days and will face the sack when a ship is finished? Does


he agree that it is likely that once a worker's part of the contract is finished he will be out? Is that not one of the implications of the Bill?

Mr. Dixon: That is perfectly true. Shipyard workers will work themselves out of a job. In the bad old days, as my hon. Friend has said, they used to lay the keel of a ship, get the ship launched and completed by the finishing date. The ship would leave the yard and the workers would be paid off. They would find themselves on the street. That is what happened in the industry before it was nationalised. There was a 50 per cent. turnover of workers in the shipbuilding industry.
When I worked in the industry I used to receive my Christmas box a week before Christmas. I would then be paid off — this happened to everyone — so that the employer did not have to pay two days of holiday pay. That was the sort of thing that happened before the industry ceased to be in private hands. We shall have one or two things to say about life in the industry in the days of private ownership when we come to Third Reading.
On Second Reading the Minister said:
By the end of 1986 the state will own less than one third of the United Kingdom industry."—[An hon. Member: "Hear, hear".]
—I do not know who said "Hear, hear" It was probably the hon. Member for Hampstead and Highgate (Sir G. Finsberg), who appears to be asleep.

Sir Geoffrey Finsberg: I only wish that I were asleep.

Mr. Dixon: The hon. Gentleman will have ample opportunity to sleep when the Minister replies to the debate. The Minister did not tell us what the size of the industry would be by the end of 1986. That is rather like the advertisements that we see on television. For example, we are told during one advertisement that a certain light bulb has 30 per cent. more life, but we are not told the life of the product with which it is being compared. In another advertisement we are told that a tyre has 50 per cent. more grip, and the obvious question is, "More grip than what?"
The Minister tells us that
By the end of 1986 the state will own less than one third of the United Kingdom industry."—[Official Report, 9 January 1985; Vol. 70, c. 793.]
We do not know whether the industry will be building ships by the end of the century because of the way in which the Government are treating it.
I hope that the Minister will accept the new clause. It will give the men in the industry some satisfaction to know that their redundancy scheme — in fact, the scheme is inferior to the scheme enjoyed by the mineworkers, which the Prime Minister boasts about every week, or the schemes for the steelworkers or dockers—will continue to have effect until a new scheme is negotiated.

Dr. David Clark: I ask the Under-Secretary of State to accept this modest new clause, because it gives the Secretary of State and the House the flexibility to manage the British shipbuilding industry much more effectively. As my hon. Friends the Members for Coventry, North-West (Mr. Robinson) and for Jarrow (Mr. Dixon) have said, the Bill brings a guillotine into the management of British Shipbuilders. Because redundancy payments have almost become a way of life in shipbuilding areas, they very much affect industrial relations in the industry.
We are trying to give the Government flexibility. How can we tell what the position will be in 18 months time? It could be transformed in one way or another. There could, for example, be another Falklands crisis and the Government could cry out for ships. If the Bill is passed in its present form, the Government will have to go through the paraphernalia of introducing a new Bill.
I emphasise that we are not talking about over-generous payments. The payments to shipyard workers, compared with workers in the other heavy industries of coal and steel, are less. We cannot emphasise that fact enough. Those hon. Members from the north-east of England, where there are appalling unemployment levels and the four travel-to-work areas which are highest on a list of travel-to-work areas along the coastal belt of Tyne and Wear from Newcastle to Middlesbrough, are aware of the problem. It may be difficult for the Government to appreciate the fact that when British Shipbuilders asks for volunteers for redundancy the lists are over-subscribed. That over-subscription is based on fear and a lack of morale. The workers are afraid of losing the pittance of £2,000 or £3,000. That genuine fear can be seen in the pubs and clubs—everywhere in the shipbuilding area.
The replacement scheme to which the Minister referred on Second Reading will not be anywhere as good as this inadequate scheme. If the Under-Secretary of State accepts new clause 1, he will get himself off the hook and will make the management of British Shipbuilders much easier. I suggest that the Under-Secretary of State should join the Opposition, because we want British Shipbuilders, and the rest of British industry, to operate in management terms as effectively as possible.
The Government are imposing a deadline of December 1986. We all know that the redundancy schemes will be cut off because we have seen what happened with Tyne Shiprepairers in my constituency and other shiprepair yards that have been privatised. By placing in the legislation this albatross of the deadline of 31 December 1986, the Minister is making life much more difficult for himself and for British Shipbuilders. He will force men out of an industry when we cannot afford to do so. I urge the Under-Secretary of State to accept the new clause.

The Parliamentary Under-Secretary of State for Trade and Industry (Mr. John Butcher): I suspect that some hon. Members are anxious for us to make progress but that other hon. Members, some of whom have spoken on the new clause, are anxious that we should continue to treat seriously the issues raised in the new clause.
I fully appreciate the reasons why the Opposition have persisted with the line of argument which, in effect, asks for reassurances that those who work in the shipbuilding industry and who will remain employees of British Shipbuilders after the privatisation programme has taken place do not feel dragooned, enticed or pushed into redundancy programmes through a fear that any successor redundancy scheme will be less generous than the existing statutory scheme. I hope to deal with that point as clearly as I can.
9.45 pm
On a quasi-administrative point, the hon. Member for Coventry, North-West (Mr. Robinson) said that the new clause merely requires a statutory order before the Act comes into force in December 1986, but he will appreciate that the Act needs to be in force in June 1985 because we


wish the further eighteen months from that date to cover British Shipbuilders employees while the new schemes are being negotiated and put into place.
Since we last discussed this subject on the Floor of the House, a number of things have happened. I remember vividly two or three hon. Members expressing their fears about the order position in British Shipbuilders' merchant yards. I remember the hon. Member for Birkenhead (Mr. Field) speaking out for his constituents and voicing his fears about the warship building programme and the need for orders at Cammell Laird.
Let us acknowledge for once that since then there has been a significant improvement in the order position, some of which is already known to the House. There are two or three items that I should like to lay before the House as giving grounds for optimism. The size of the order book will determine whether the provisions that we are discussing will be needed.
The House knows that Cammell Laird has an order for a type 22 frigate and that Swan Hunter also has a type 22 on order and that, subject to some detailed contractual obligations, has an option on a type 23. The position has improved dramatically at Austin and Pickersgill with two SD 14s. That order was obtained after great effort, and I pay tribute to the trade unions and to the management of Austin and Pickersgill for putting together a package which shows that they are determined to come out fighting, to make the best of their current order book and to see themselves through what has been a nasty few weeks to a position where I hope that they can compete and obtain more orders in the future.
I am delighted to report to the House that next week an order for a fisheries research vessel from the Ministry of Agriculture, Fisheries and Food will be going to Ferguson-Ailsa. Without wishing to steal any of the thunder that I hope Graham Day will receive when he returns to the country in the near future, I can predict with some certainty that he will announce a major order for a merchant yard.

Dr. Godman: I also have some knowledge of the announcement that Mr. Day or his representatives are likely to make when he returns. The Minister gave good news about Ferguson-Ailsa. Can he expand on it?

Mr. Butcher: Only to say that the final details will be known next week, but having checked with my officials I am confident in having gone as far as I have tonight. I thought that while we were discussing the SRPS would be an appropriate occasion for those observations to be made.

Mr. Christopher Chope: My hon. Friend has not mentioned Vosper Thornycroft. When the House last considered this matter, there were high hopes in Southampton that Vosper Thornycroft would receive extra orders. Can my hon. Friend tell us anything about the prospects for Vosper Thornycroft and for Vosper Shiprepairers which is a Southampton yard which is short of orders? Those yards face the spectre of privatisation, and people are enthusiastic—[Interruption.] Perhaps I should express that slightly differently. There is anxiety in Southampton that it is losing orders because of the indecision about privatisation. I should be grateful to hear what my hon. Friend has to say.

Mr. Butcher: First, I am sure that a spectre could also be defined as a grand vision.
Secondly, it is certainly not my intention to be less helpful to my hon. Friend the Member for Southampton, Itchen (Mr. Chope) than I have been to some Opposition Members. I advise my hon. Friend to fall into conversation in the Lobby with my right hon. Friend the Secretary of State for Defence. I have had such a conversation myself. My right hon. Friend is fighting very hard for a major order that he hopes may go some way towards assuaging my hon. Friend's fears. My right hon. Friend's efforts in that direction are deadly serious.
The main purpose of the Bill is to extend the shipbuilding redundancy payments scheme from June this year to December 1986. On Second Reading, my hon. Friend the Minister of State clearly explained the need for such an extension. He noted that British Shipbuilders still has a long way to go to achieve real stability and a firm future. It would be foolish to ignore the risk that the market might force further rationalisation on the corporation. In such circumstances, the scheme could be of real value to both management and workforce. However, it is likely that by the end of 1986 British Shipbuilders and Harland and Wolff together are likely to employ less than a third of those working in the industry. The need for an inflexible statutory scheme, Acts of Parliament and statutory orders will have passed. The industry will then be better served by a non-statutory scheme agreed between unions and management.
Opposition Members have pressed the Government to describe or table the successor scheme. However, it is far too soon to predict the sort of scheme that will suit the industry in 1987. Opposition Members would be the first to complain if the Government were to prescribe the terms of a non-statutory scheme and to declare that those terms were non-negotiable. They would rightly say that the. Government should allow industry to determine such details of the scheme as the balance between lump sums and weekly support payments, and that the industry itself should determine how those payments should be related to pay, age, length of service and so on. I am not prepared to predict the shape of the successor scheme. It is not for me or the Government to give an assurance that the scheme would be as generous as, or more generous than, the present arrangement.

Mr. Geoffrey Robinson: If that is so, why did the Minister of State specifically undertake on Second Reading that there was no reason to suppose that those employees still with British Shipbuilders would be any worse off under the successor scheme than under the present one?

Mr. Butcher: If the hon. Gentleman had contained himself for 30 seconds, he would have heard me emphasise the fact that it is no part of the Government's intention to require British Shipbuilders to implement a scheme that is, overall, less generous than the present one.
We have stated the Government's position clearly on three occasions, but we are not going to lay down a successor scheme in statute form.

Mr. Robinson: We hear, in the Minister's tortuous terminology, that the Government are not going to require British Shipbuilders to implement a scheme that is less generous than the present one. We want to hear again the commitment given by the Minister of State on Second


Reading that people will be as well off as they are under the present scheme. Cannot the Minister give that commitment?

Mr. Butcher: The hon. Gentleman will have to re-read what I have just said and what my hon. Friend the Minister of State said. My hon. Friend was as clear as he could possibly be. There are times when the House indulges in tortuous terminology, but neither my hon. Friend nor I could have been clearer about what we hope for from the successor scheme in comparison with current arrangements. That is why my hon. Friend said, and why I repeat, that there is no need to fear that the work force may be worse off.

Mr. Frank Field: I find the Minister's comment helpful. He has made it clear that workers will not be at a disadvantage under the new scheme as compared with the present scheme. If that is so, why does the Minister not simply extend the present scheme?

Mr. Butcher: We are extending the scheme for 18 months to give employees of British Shipbuilders, until December 1986, the reassurance that they will not be affected deleteriously. We are saying that, after 1986, there should be parity between the private sector and the public sector in regard to not having to put a statutory scheme on either of them. We also said in Committee—I hope that this will go some considerable way to reassure the hon. Gentleman—that when British Shipbuilders has negotiated its scheme with representatives of the work force the provisions of that scheme will be covered, as they are now, by Government funding. The Government have been asked whether the scheme will be financially neutral. There will be no cost to British Shipbuilders.
We have made our intention clear. We have signalled that we will supply the wherewithal, but we are not saying that the scheme will be statutory. Nor are we saying that we are prepared to impose such a scheme on British Shipbuilders when neither the private sector nor the warship building yards that are to be privatised will be subject to the same requirement.

Mr. Field: I am now puzzled by the Minister's use of the word "impose". If I heard him correctly, he is saying that he expects that, after 1986, British Shipbuilders will run a scheme as generous as, if not more generous than, the present one and that on no account will the scheme be worse than the present one for those who remain in the state sector.

Mr. Butcher: The hon. Gentleman is right to home in on the word "impose". We are not prepared to legislate for the continuation of the scheme as it is. We want the scheme to end in December 1986 and have given commitments to that effect. We want parity in the requirements put on employers between the private and public sector through this methodology.
New clause 1 would require the Government to introduce a statutory order before the Act came into force, and the order would be subject to affirmative resolution. That procedure would cause delay and uncertainty for those who work in the shipbuilding industry — those whom Opposition Members claim to represent. The procedure would also waste the time of the House — there has been plenty of that tonight—by permitting yet another debate on the need for the Bill. We could not even

proceed with the writing-off of the Upper Clyde Shipbuilders Limited debt until the order had been approved. I see no merit in that.

Dr. David Clark: On a point of order, Mr. Speaker. Is it in order for the Minister to accuse hon. Members of wasting the time of the House?

Mr. Speaker: The Minister is responsible for what he says, but I do not think that he really meant that.

Mr. Butcher: I certainly did not mean that the hon. Member for South Shields (Dr. Clark) had wasted the time of the House. This is an important Bill and I suspect that some Opposition Members, like me, wonder why we did not start this debate until about half an hour ago. I hope that that clarifies what I meant to say.
The procedure provided by new clause 1 would be similar to that which was undergone when the scheme was previously extended in 1981 and 1982. On both occasions there was primary legislation, followed by an order which extended the life of the scheme. That procedure was perhaps cumbersome, but statutory orders had to he tabled anyway to improve benefits, increase the upper-earnings limit, consolidate the regulations or to make other changes. However, we are making no changes this time. The upper-earnings limit increases automatically every year, so there is no need for an order.
Almost all those who have spoken have said that they welcome the main purpose of the Bill and the further extension of the shipbuilding schemes. There is, therefore, no sense in delaying its implementation, which is all that new clause 1 would do. I therefore urge the House to reject the new clause.

Mr. Geoffrey Robinson: The Minister's answer is extremely evasive. He has tried to sidetrack us with some judiciously placed orders and by telling us that 11,000 ship workers, who will remain in the public sector, are of little concern to him. Moreover, he has said that we are trying to waste the time of the House.
The Parliamentary Under-Secretary has refused to give what my hon. Friend the Member for Birkenhead (Mr. Field) sought, that is, a requirement on British Shipbuilders that the scheme should be equal to the present one. If that were the case we would not need the present legislation. The Minister failed to give that undertaking, we must fear the worst and, therefore, we must push the new clause to a vote.

Question put, That the clause be read a Second time:

The House divided: Ayes 104, Noes 193.

Division No. 91]
[10 pm


AYES


Alton, David
Clay, Robert


Ashdown, Paddy
Cocks, Rt Hon M. (Bristol S.)


Ashton, Joe
Cohen, Harry


Bagier, Gordon A. T.
Cook, Frank (Stockton North)


Banks, Tony (Newham NW)
Corbyn, Jeremy


Barron, Kevin
Cowans, Harry


Beith, A. J.
Craigen, J. M.


Bennett, A. (Dent'n &amp; Red'sh)
Cunliffe, Lawrence


Brown, Gordon (D'f'mline E)
Dalyell, Tam


Brown, Hugh D. (Proven)
Davies, Ronald (Caerphilly)


Brown, N. (N'c'tle-u-Tyne E)
Davis, Terry (B'ham, H'ge H'I)


Buchan, Norman
Deakins, Eric


Caborn, Richard
Dewar, Donald


Callaghan, Jim (Heyw'd &amp; M)
Dixon, Donald


Campbell-Savours, Dale
Dobson, Frank


Canavan, Dennis
Dormand, Jack


Clark, Dr David (S Shields)
Douglas, Dick


Clarke, Thomas
Dubs, Alfred






Duffy, A. E. P.

Marshall, David (Shettleston)


Dunwoody, Hon Mrs G.
Mason, Rt Hon Roy


Eadie, Alex
Maxton, John


Eastham, Ken
Michie, William


Evans, John (St. Helens N)
Millan, Rt Hon Bruce


Ewing, Harry
Morris, Rt Hon A. (W'shawe)


Field, Frank (Birkenhead)
Nellist, David


Fields, T. (L'pool Broad Gn)
O'Brien, William


Fisher, Mark
O'Neill, Martin


Flannery, Martin
Parry, Robert


Garrett, W. E.
Patchett, Terry


Godman, Dr Norman
Penhaligon, David


Golding, John
Pike, Peter


Gould, Bryan
Prescott, John


Harrison, Rt Hon Walter
Radice, Giles


Hogg, N. (C'nauld &amp; Kilsyth)
Redmond, M.


Home Robertson, John
Richardson, Ms Jo


Howells, Geraint
Robinson, G. (Coventry NW)


Hoyle, Douglas
Ross, Stephen (Isle of Wight)


Hughes, Robert (Aberdeen N)
Skinner, Dennis


Hughes, Simon (Southwark)
Snape, Peter


John, Brynmor
Soley, Clive


Jones, Barry (Alyn &amp; Deeside)
Steel, Rt Hon David


Kennedy, Charles
Stott, Roger


Leadbitter, Ted
Strang, Gavin


Lewis, Ron (Carlisle)
Straw, Jack


Lewis, Terence (Worsley)
Thompson, J. (Wansbeck)


Litherland, Robert
Wardell, Gareth (Gower)


Lloyd, Tony (Stretford)
Welsh, Michael


Loyden, Edward
Wigley, Dafydd


McDonald, Dr Oonagh
Winnick, David


McGuire, Michael
Young, David (Bolton SE)


McKay, Allen (Penistone)



McNamara, Kevin
Tellers for the Ayes:


Madden, Max
Mr. James Hamilton and


Marek, Dr John
Mr. Frank Haynes.


NOES


Alexander, Richard
Clark, Hon A. (Plym'th S'n)


Amess, David
Clark, Dr Michael (Rochford)


Ancram, Michael
Clarke, Rt Hon K. (Rushcliffe)


Arnold, Tom
Cockeram, Eric


Ashby, David
Colvin, Michael


Atkins, Robert (South Ribble)
Coombs, Simon


Atkinson, David (B'm'th E)
Cope, John


Baker, Rt Hon K. (Mole Vall'y)
Couchman, James


Baker, Nicholas (N Dorset)
Dicks, Terry


Baldry, Tony
Dorrell, Stephen


Batiste, Spencer
Dover, Den


Beaumont-Dark, Anthony
Dunn, Robert


Bellingham, Henry
Durant, Tony


Benyon, William
Dykes, Hugh


Bevan, David Gilroy
Edwards, Rt Hon N. (P'broke)


Blackburn, John
Emery, Sir Peter


Blaker, Rt Hon Sir Peter
Evennett, David


Boscawen, Hon Robert
Eyre, Sir Reginald


Bottomley, Peter
Fallon, Michael


Bottomley, Mrs Virginia
Finsberg, Sir Geoffrey


Bowden, Gerald (Dulwich)
Fletcher, Alexander


Braine, Rt Hon Sir Bernard
Fookes, Miss Janet


Brandon-Bravo, Martin
Forsyth, Michael (Stirling)


Bright, Graham
Fox, Marcus


Brinton, Tim
Gale, Roger


Brooke, Hon Peter
Garel-Jones, Tristan


Bruinvels, Peter
Gorst, John


Buck, Sir Antony
Gower, Sir Raymond


Budgen, Nick
Greenway, Harry


Burt, Alistair
Gregory, Conal


Butcher, John
Griffiths, E. (B'y St Edm'ds)



Carlisle, Kenneth (Lincoln)
Ground, Patrick


Carttiss, Michael
Grylls, Michael


Cash, William
Gummer, John Selwyn


Chapman, Sydney
Hamilton, Hon A. (Epsom)


Chope, Christopher
Harris, David




Hawkins, C. (High Peak)
Roe, Mrs Marion


Hayes, J.
Rowe, Andrew


Hayward, Robert
Ryder, Richard


Heddle, John
Sackville, Hon Thomas


Henderson, Barry
Sainsbury, Hon Timothy


Hind, Kenneth
Sayeed, Jonathan


Holland, Sir Philip (Gedling)
Shaw, Sir Michael (Scarb')


Holt, Richard
Shelton, William (Streatham)


Howarth, Gerald (Cannock)
Shepherd, Colin (Hereford)


Johnson Smith, Sir Geoffrey
Silvester, Fred


Key, Robert
Sims, Roger


King, Roger (B'ham N'field)
Skeet, T. H. H.


Lamont, Norman
Smith, Tim (Beaconsfield)


Lang, Ian
Soames, Hon Nicholas


Lawler, Geoffrey
Speed, Keith


Leigh, Edward (Gainsbor'gh)
Speller, Tony


Lightbown, David
Spence, John


Li Hey, Peter
Spencer, Derek


Lloyd, Peter, (Fareham)
Spicer, Jim (W Dorset)


Lord, Michael
Squire, Robin


Lyell, Nicholas
Stanbrook, Ivor


McCurley, Mrs Anna
Stern, Michael


Macfarlane, Neil
Stevens, Lewis (Nuneaton)


MacGregor, John
Stevens, Martin (Fulham)


Maclean, David John
Stewart, Allan (Eastwood)


Major, John
Stewart, Andrew (Sherwood)


Malins, Humfrey
Sumberg, David


Malone, Gerald
Taylor, John (Solihull)


Maples, John
Temple-Morris, Peter


Marlow, Antony
Terlezki, Stefan


Marshall, Michael (Arundel)
Thomas, Rt Hon Peter


Mather, Carol
Thompson, Donald (Calder V)


Mawhinney, Dr Brian
Thompson, Patrick (N'ich N)


Mayhew, Sir Patrick
Thorne, Neil (Ilford S)


Mellor, David
Thornton, Malcolm


Merchant, Piers
Thurnham, Peter


Meyer, Sir Anthony
Townend, John (Bridlington)


Miller, Hal (B'grove)
Tracey, Richard


Mills, Iain (Meriden)
Trippier, David


Mills, Sir Peter (West Devon)
Trotter, Neville


Moate, Roger
Twinn, Dr Ian


Monro, Sir Hector
van Straubenzee, Sir W.


Montgomery, Sir Fergus
Waddington, David


Moore, John
Walker, Bill (T'side N)


Morris, M. (N'hampton, S)
Ward, John


Moynihan, Hon C.
Wardle, C. (Bexhill)


Murphy, Christopher
Watson, John


Nelson, Anthony
Watts, John


Newton, Tony
Wells, Bowen (Hertford)



Nicholls, Patrick
Wheeler, John


Norris, Steven
Whitfield, John


Onslow, Cranley
Whitney, Raymond


Ottaway, Richard
Wilkinson, John


Page, Sir John (Harrow W)
Wolfson, Mark


Page, Richard (Herts SW)
Wood, Timothy


Patten, Christopher (Bath)
Yeo, Tim


Pawsey, James
Young, Sir George (Acton)


Peacock, Mrs Elizabeth
Younger, Rt Hon George


Pollock, Alexander



Portillo, Michael
Tellers for the Noes:


Powell, William (Corby)
Mr. Michael Neubert and


Rhys Williams, Sir Brandon
Mr. Mark Lennox-Boyd.


Roberts, Wyn (Conwy)

Question accordingly negatived.

Orders of the Day — BUSINESS OF THE HOUSE

Ordered,
That, at this day's sitting, the Shipbuilding Bill, the Milk (Cessation of Production) Bill, and the Town and Country Planning (Compensation) Bill may be proceeded with, though opposed, until any hour.—[Mr. Archie Hamilton.]

Orders of the Day — Mr. Speaker's letter of 30 January 1985 (matters sub judice)

Mr. Speaker has authorised the publication of the following letter to Mr. Tam Dalyell, pursuant to the procedure laid down in Mr. Speaker's statement on 5 November 1981—[Official Report, c. 113].
I undertook to write to you about the point of order you raised on Monday in which you drew attention to the comments reported in The Times of that day by Lord Hill-Norton on two cases of current litigation.
The first of these was the Ponting case. I ruled last week that this case, currently being tried at the Old Bailey, is sub judice. That ruling included the issues of jury vetting and in camera hearings. As I said then, for the House to discuss any facet of the security aspects of this case could be prejudicial to the conduct of the trial.
The sub judice rule remains in force until the verdict and sentence have been announced. If an appeal is lodged, the rule comes into force again until the appeal has been decided.

In the other case to which your referred on Monday, Thornycroft Giles v. British Shipbuilders, I am informed that there have been preliminary proceedings involving disputes before a court over the discovery of documents in which the Government have been involved. These proceedings are to be resumed at a later date so that they too must fall under the sub judice rule.
Of course it remains open to any hon. Member to pursue general points about jury vetting and in camera hearings in any parliamentary way open to him, provided that no reference is made to a case which is sub judice. I understand you and other Members are already using the available procedures in this sense.
I have of course no responsibility for anything that Lord Hill-Norton says, and no Point of Order for me can arise out of his alleged statements. But I do have a responsibility to uphold the rules which the House of Commons has itself agreed. One of the most important of these rules is that we should say nothing in this place which might prejudice a fair trial of persons before the courts, or give the appearance that Parliament is seeking to influence the administration of justice.

Orders of the Day — Shipbuilding Bill

Motion made, and Question proposed, That the Bill be now read the Third time.

Mr. Nicholas Brown: I do not wish to review the strategic arguments that affect the industry's future, because we have recently had an opportunity to do precisely that, although of course in Opposition time. However, there have been a number of recent developments in the fortunes of the industry which have given me serious cause for concern and directly affect the Bill now under discussion.
I and my hon. Friends are not opposed to the further extension of the British Shipbuilders redundancy scheme. What worries us is that we are voting to extend the Bill for the last time and that what happens after that, in spite of the assurances that the Minister tried to give earlier, is by no means determined.
The industry is being forced through a period of contraction by market forces, by the present ordering programme of the Ministry of Defence and, most significantly of all, as a direct result of Government policy. It is not possible to foresee where the industry will be at the end of 1986.
The Government have committed themselves to selling off those yards that they have designated as warship yards to the private sector by March 1986. If the Minister wishes to correct me on that figure, I will willingly give way to him. I understand that it is the Government's intention that all the yards designated as warship yards shall be in private hands by March 1986, or closed. The main customer for these yards, as we all understand is the Ministry of Defence. It is a pretty safe bet that any prospective private purchaser will be looking at the Ministry of Defence ordering programme and the potential competition before making any commitment.
The brutal fact of the matter is that there is at present more warship building capacity in British shipbuilders than there is demand in the Ministry of Defence. It may well be that private investors in the pirit of free enterprise will sustain more capacity than demand in the hope of putting their rivals under. In my view, a far more likely scenario than that form of investors' Russian roulette is that the private sector will be willing to invest only in sufficient capacity to meet foreseeable demand, and who can blame it? I would not expect Conservative Members to blame the private sector for that.
Let us consider the position of a warship yard that has not been privatised possibly because nobody will buy it and whose last ship is to be completed after the end of 1986. In those circumstances, is it fair to the workers that they should stare redundancy and long-term unemployment in the face without the British Shipbuilders scheme or any properly spelt out successor, and risk leaving the industry on terms that are less favourable than those on which people left the industry when the redundancies were first announced, selling their jobs at the first opportunity? That cannot be just. We have a duty to the remaining work force in the industry, not just to those who have already left and who the Government hope will leave before 1986.
There is bound to be a suspicion that the recently announced orders in certain merchant and warship yards

are only a reprieve, and that it is the Government's intention to buy some time and buy off extra trouble while the sterling crisis and the miners' strike are under way. The fear is that later that reprieve will be clawed back, and the on-cost of providing those orders will also be clawed back from savings on the British Shipbuilders redundancy scheme. At the very least, the Government have a duty to spell out what terms and conditions will prevail in the industry for redundancy payments after 1986, particularly what terms and conditions will prevail in a warship yard which, presumably, will have a peculiar limbo status if it has not been privatised and is not intended to remain in British Shipbuilders. The status of such a yard is not clear, and the terms and conditions under which the men can expect redundancy are not clear either. For example, what will happen to their accumulated rights in employment, not under the state scheme, but under the British Shipbuilders redundancy scheme? Can the Minister give the House an assurance at least on that?
Another factor affecting the defence aspect is the cost of Trident. Potential investors in warship yards must work out how much of the conventional naval programme is likely to be delayed or cancelled through the escalating cost of Trident, unless the individual is a potential investor in Barrow-in-Furness. He would have to work out whether the British economy could sustain the Trident programme and what effect cancellation would have on the Ministry of Defence's demand for Trident-bearing submarines. That is all a matter of speculation. No hon. Member can predict accurately how events will unfold. In those circumstances, it is wrong for the House to acquiesce to the redundancy provisions of the Bill as if all were settled and planned.
I remind the House that we are not talking about generous redundancy terms. Time has eroded the effect and value of the original scheme. The average redundancy payment to a British Shipbuilders employee is £5,000. The age range of those leaving the industry contains some considerable surprises. Up to the year end of 1984, over the preceding two years some 45 per cent. of those seeking voluntary redundancy were over 50, which is expected, but what is not expected is that 37 per cent. of them were under 40. They should have the prospect of a working life, yet in my constituency half the unemployed men in the four shipbuilding local Government yards are skilled, time-served men with shipbuilding and heavy engineering skills. I am told that the average age of the present round of volunteers for redundancy at Swan Hunter is 33.
The reason behind those figures, which show that younger people are leaving the industry, is not hard to find. Since 1979 the real wages of shipyard workers have steadily declined. The Chancellor of the Exchequer tells us that when real wages decline, more jobs are created. His highly dubious theory does not work out in the shipbuilding industry, where the decline in the total labour force has been paralleled by the rapid decline in the real wages of the remaining labour force. Almost all the young ancillary workers with families in my constituency and many skilled men are now in receipt of family income supplement, rate relief or housing benefit. They are caught in the poverty trap, and the on-cost of working is making many men think carefully about their commitment to the industry.
Shipbuilding has become a low-paid industry. Let no Conservative Member say that the work force has made no sacrifices to save it because the evidence shows that it has.


All the basic decency and willingness to work that typifies shipbuilding communities is played on by the Government when they say, "Be competitive and there will be work at the expense of your fellow worker elsewhere in the country." Swan Hunter has made an effort to be competitive. Recently it submitted a competitive tender for two type 22s, hoping to win both on competitive grounds. The Under-Secretary of State for Trade and Industry said, when we discussed the Bill on Wednesday, 9 January, about the decision on the type 22s:
The decision will be based on the judgment of the Secretary of State for Defence of the ability of the yards to complete those ships on spec, on time and within the contract price. In other words, it will be a competitive decision on merit, and on commercial grounds, if the hon. Gentleman wishes to call it that."—[Official Report, 9 January 1985; Vol. 70, c. 837.]
By "the hon. Gentleman" he meant me.
When the Secretary of State for Defence came to announce the orders for the two type 22s he made it clear that Swan Hunter had won the competitive tender, but one ship was going to Merseyside because of social factors, and in particular the hardship that would be caused by redundancies. I applaud the Government's willingness to consider social factors, particularly in areas of high unemployment, not least because similar arguments apply to my constituency. However, if Swan Hunter is forced to announce a further round of redundancies because it did not get the order for the second type 22, or because the promised type 23 is delayed for as long as the type 22 was delayed, the Ministry of Defence need not bother to urge competitiveness on the industry, and the people of Tyneside will know what worth to give to the words of the Under-Secretary of State for Trade and Industry.

Mr. Frank Field: My hon. Friend will realise that I do not want to go into too much detail at this point, but when he is talking about competitive tendering, is he aware that, whereas Swan Hunter was allowed to compete for both frigates, Cammell Laird was allowed to compete for only one? The only coherent reason put forward for that was that if Cammell Laird had won both frigates it would have been taking on workers when Swan Hunter would have been making redundancies. My hon. Friend is right to focus attention on the competitive side, and is wise not to quote the answer given to a parliamentary question that he asked, which gave a rather different interpretation as to how the orders would be placed. However, is he aware that the basis for competitive tendering was not allowed to all the competing yards?

Mr. Brown: I understand my hon. Friend's point, which is a valid one. There is no issue between myself and my hon. Friend. The issue is between the Labour party, which has urged the Government to take account of social needs and factors such as high unemployment, and the Conservative party. The Minister said that the orders would be based on commercial factors, but the Secretary of State for Defence then made it clear that social and compassionate considerations such as unemployment played a part in placing the order. The Government have not said that before now.
This new theory raises an issue. How will the Ministry of Defence now get competitiveness from the warship yards when they are privatised? We all know that the Secretary of State for Defence now has a more wide-ranging decision-making process. Who will put money into a private business with only one major customer, an

eccentric who is likely to say to a yard, "Yours was the most competitive bid, but I am placing the order elsewhere"?
The Government have now conceded that there is no free market in merchant shipbuilding, and even claim that that was always their view. They should now concede that there is also no free market in domestic warship building, even when they are the major customer. What a ludicrous state of affairs that is. The Government should think again about how they intend to approach the industry.
I do not mean to make a controversial suggestion, but perhaps the Department of Trade and Industry and the Ministry of Defence could agree a common approach. Until they have done that, the House would be unwise to set a final date to the British Shipbuilders redundancy scheme.

Mr. Dixon: The Parliamentary Under-Secretary of State for Trade and Industry accused us of wasting the time of the House. We are talking about redundancy pay, albeit—

Mr. Butcher: I made it very clear that I was concerned about the fact that this debate was so late in starting. Perhaps I should not have implied that the previous debate took longer than had been expected, but I thought I made it absolutely clear that this debate was not wasting time but was dealing with very serious issues.

Mr. Dixon: The hon. Gentleman has made that clear now, but he did not make it clear before. We believe that it is important to talk about redundancy pay. It is very important to those workers in the shipbuilding industry in Tyne and Wear who are to be made redundant. Already 72,558 men are out of work in that area. Of those, 35,998—or 49·6 per cent.—have been out of work for more than 12 months. They are the long-term unemployed. Those who are to be made redundant in the shipbuilding industry will join the dole queue in that area. They will have no chance of ever getting another job. The Prime Minister refers each Tuesday and Thursday to the miners having lost £8,000 in wages in 11 months, that gives some idea of what the redundancy payments amount to. They do not amount to even 12 months' wages.
During the Second Reading debate and the Committee stage not once did we hear either the Parliamentary Under-Secretary of State or the Minister of State refer to the social consequences of redundancies in the shipbuilding industry. The shipbuilding industry, like the mining industry, is a closely knit community. My hon. Friend the Member for Wallsend (Mr. Garrett) knows how closely knit the shipbuilding industry is in his area. Almost 62 per cent. of the people who work at Swan Hunter live in Wallsend or in adjacent towns. My hon. Friend the Member for Sunderland, North (Mr. Clay) knows about the effect of Austin and Pickersgill upon that community. Most of the men live within five miles of the shipyard. That is the kind of social consequence to which we refer when we talk about shipbuilding communities.
In the 1930s, unemployment in the Tyne and Wear area was 30 per cent. above the national average. It is now 40 per cent. above the national average. Instead of deriding shipbuilding workers the Government should praise them every now and again. It was alleged that there was late delivery of the "Atlantic Conveyor". In fact, the "Atlantic Conveyor" was delivered within days of the original contract date. It is a pity that Ministers did not refer to the


French shipyard workers. They had a contract for a sister ship of exactly the same design six months before Swan Hunter got theirs for the "Atlantic Conveyor" but they have not finished it yet. However, we hear nothing about the French shipyard workers. We hear only about the British shipyard workers whom the Minister and the Government seem to deride.
On Second Reading the Government referred to massive investment in the shipbuilding industry. The Minister referred to investment amounting to £1,000 million. In a previous debate the Prime Minister referred to £1,000 million of taxpayers' money having been invested in British Shipbuilders since 1979. It is time that this was put into perspective. May I quote what was said by the former chairman of British Shipbuilders. He was the last decent chairman. The present chairman is a waste of time. He is doing more damage to the shipbuilding industry than MacGregor is doing to the coal mining industry. I am referring to Graham Day. In the Sunderland Echo on 23 July 1984 Sir Robert Atkinson said:
much has been made of the £800 million Government aid to shipbuilding from nationalisation to the time I left the B.S. chair. But this was a 'half-truth' because the industry was so undercapitalised, one half of that £800 million was in fact used as working capital and in capital expenditure, not in direct subsidies.
That is what the former chairman of British Shipbuilders said about the so-called taxpayers' handout to the British shipbuilding industry.
Clause 2 talks about writing off the debt that the Clyde shipyards incurred under the shipbuilding industry board set up under the Geddes report in 1966. The British shipbuilding industry has been undercapitalised for many years. In 1962 we had the Paton report. In 1966 we had the Geddes report which set up the shipbuilding industry board which lent the industry money because people were not investing at that time. In 1973 we had the Booz Allen report. Each of those reports since the war talks of lack of investment in the shipbuilding industry.
How on earth can British shipyard workers compete with those in Sweden, on the continent or the far east when the industry was starved of investment when it was in private hands up to 1977?
In a survey carried out in the 1970s it was found that the assets in the British shipbuilding industry were £825 per worker, compared with more than £1,000 in Germany, more than £1,200 in Italy, more than £1,800 in Sweden and more than £2,800 in Japan. In 1982 British Shipbuilders invested £100 million. In 1982 the Japanese shipbuilding industry invested £620 million in their seven biggest yards. Korea has been investing £400 million a year. Yet the Minister comes along and tells us that the Government have been over-financing the shipbuilding industry.
The Government have had to invest money because while the shipbuilding industry was in in private hands up to 1977 not a halfpenny was invested in the yards. I can recall working in the shipyards in the 1960s when we used to push shell plates round in wooden barrows. Yet at that time the Japanese and Swedish shipyards had computers. No one would invest in the British shipbuilding industry. The workers could not even have gloves to hold lugs. I recall many nights going home with septic burns on my

hands because the management would not give the acetylene welders gloves. Those are the sort of conditions in which we used to work in the shipyards.
Clause 2 talks about when the shipbuilding industry was in private hands and that is what I am talking about. I recall a launch in Swan Hunter when the management stopped the workers' launch allowance of 37½p a day, yet it stripped the joiners' shop to put a champagne party on for guests at the launch. That is what happened when the shipyards were in private hands. Let me tell the Government that the shipyard workers will not go back to those days.
On Second Reading my hon. Friend the Member for Newcastle upon Tyne, East (Mr. Brown) talked about victimisation. It was easy then because of what were called the markets. For the benefit of those hon. Members who do not know what they were I can tell them that they were named after cattle markets. We used to go each morning at 7.30 in the hail, rain or snow and stand outside the foreman's office. He would come out and point to those he wanted to work that day. Those who were not picked out used to go home soaking wet and not get a penny piece. That is what the industry was like when it was in private hands. We need no lectures from the Government telling us that the industry will be better in private hands. The industry failed in private hands, and that is why it was nationalised in 1977.
When the ship building redundancy scheme was introduced, my predecessor, the then hon. Member for Jarrow, Ernest Fernyhough, said:
Sitting here, I wondered … whether the story of Jarrow would not have been different if we could have had something as such as this in the 1930s." — [Official Report, 16 January 1978; Vol. 942, c. 186.]
In the 1930s, in Jarrow men got nothing when they finished work. They were paid off with no notice at all.
After the war the only people who got notice were tradesmen. I got two hour's notice when I was sacked and that was to grind my tools. Anyone who did not have tools — who was not a shipbuilder, joiner, carpenter but an ancillary worker—got no notice at all. They were told by the foreman or manager that they should go to the time office and draw their books and money and stand on their own time to get their books and money. That is what it was like when the industry was in private hands. That is what shipyard workers had to experience.
We are talking about an area such as mine in south Tyneside where 60,000 people rely on state benefits. Most of the men who are paid off will join those who have to depend upon housing benefit. That is the position which prevails in areas where shipbuilding is relied upon for male employment.
Some hon. Members talk about a different scheme. Some say that the public and private schemes should be similar. The private sector has no redundancy schemes. Smith's docks on the river has no redundancy scheme because it remains in the private sector. Many private shipyards have no redundancy schemes.
The Minister says that no redundancy scheme other than the state scheme should operate. That is the truth. It is no good the Minister saying that shipyards are able to negotiate a scheme. He does not know what scheme can be negotiated. It is up to the unions and the management.
On Second Reading the Minister referred to compensation and said that it was the subject of negotiation. That was misleading. Directors from Tyne


shiprepairers met me and my hon. Friend the Member for South Shields (Dr. Clark) and told us what the buy-out was to the yards and asked us to have a word with the shipyard workers and to get them to accept the scheme. I told them that I would not advise them to accept anything less than they had at the moment. We were told that there was no room for negotiation. That is the truth of the matter.
We want the Minister to give us something constructive. We do not want to argue about shipbuilding redundancies. We want stability in the industry. Workers want a job, not a buy-off which will give them less than a year's wages.
The Government should have a maritime policy and tell the workers in the industry — those who go to sea in ships—that we have a Minister responsible for shipping. Possibly we are the only maritime nation in the world without a maritime policy. When one wants to talk about maritime policies or shipbuilding, one goes to the Department of Trade. When one talks about shipping one goes to the Transport Department and when one wants to talk about warships one goes to the Ministry of Defence. We want some political and financial support for the shipbuilding industry during the recession.

Mr. Frank Field: Does my hon. Friend agree that, while we have been in the House, there has not been a debate on a corporate plan for the industry and the amount of money that would be needed to finance such a plan?

Mr. Dixon: My hon. Friend is right. Indeed, the last corporate plan was put forward by Mr. Graham Day after he had been ordered to appear before the Select Committee that was looking into the shipbuilding industry. He was not keen on giving details of that plan to the Select Committee because the Secretary of State had instructed him not to provide that Committee with the evidence that he had given to the Department. The trade unions were not even involved in the process; he did not even discuss the matter with them.
We need a positive and co-ordinated Government policy. We should not have to stand here arguing about shipbuilding redundancy terms. The workers want to work and to build ships. The Government keep saying that we make a profit on warships and lose on merchant ships. One would think that one set of workers worked harder than another. The loss on merchant ships is easily explained. Every nation, including Japan and Germany, is having to subsidise merchant shipbuilding.
The British Government keep relying on a free market economy. That will not work, as we saw recently when the Chancellor had to intervene to stop the pound sinking further. We cannot allow our shipbuilding industry to sink. Let us have some positive plans from the Government.

Mr. Ted Garrett: I have spoken in virtually every debate on shipbuilding since I was elected in 1964. Each debate is more gloomy than the last, and this one, as we debate the ending of redundancy payments for shipbuilding workers, will not lift the gloom.
The hon. Member for Southampton, Itchen (Mr. Chope) made a Freudian slip when he said that he was worried about the spectre of privatisation. The word "spectre" was taken up by the Minister, who said that it could relate to something in the distant future. The word was also used by Karl Marx. Many hon. Members will

have read the ending of the Communist manifesto, but few will have read the beginning. It begins by saying that a spectre is haunting Europe. That was written in February 1848. If, however, we change the word "Communism" for "unemployment," we can say that the spectre of unemployment is haunting Europe, no more so than in the United Kingdom, and in particular in our shipbuilding industry.
My hon. Friend the Member for Jarrow (Mr. Dixon) recalled the 1930s and the iniquitous system of employment under private ownership. Those who are still employed in the British shipbuilding industry have a deep-seated fear about the future. The only way to give them confidence is to have a degree of job security, despite the uncertain world markets. It must be possible to say that a regular work force, a minimum number, will be required for the industry.
There is a need to address ourselves again — I am glad that my hon. Friend the Member for Birkenhead (Mr. Field) referred to it—to a corporate plan. Redundancy is uppermost in the minds of all those who are fortunate enough to have a job, but in a negative sense. They are concerned about getting their money and getting out. The Bill, which will be given its Third Reading tonight, will end any speculation. When the current extension expires, that will be the end of the shipbuilding redundancy payments scheme. The negotiations that will take place with prospective private employers, assuming that there are some, will be rather different from past negotiations. I agree with my hon. Friend the Member for Jarrow that the prospects are not marvellous when one becomes aware of the extent of the under-capitalisation and the shortage of the necessary equipment to bring the yards up to a modern state to enable them to compete in world markets. Irrespective of the complexion of the Government, the first task must be to improve the morale of the work force. Secondly, we must try to ensure some continuity in spite of the volatility of the world shipbuilding market.
I wish to correct my hon. Friend the Member for Jarrow on one detail. The "Atlantic Conveyor" would have been built to time if it had not been for the Ministry of Defence input. The MOD insisted on certain modifications and they were implemented by the shipbuilders. It was a nightmare job. However, the ship sailed on time. If anyone gets the chance to tour the ship, he or she will be pleased to see that it is a dual-purpose vessel which could be the harbinger of vessels which could be used in the event of another maritime conflict.
I ask the Minister to recognise that there has been an improvement in orders since we were considering the Bill in Committee. I do not seek to belittle the efforts that he and and his civil servants have made, in co-operation with British Shipbuilders, to obtain the orders, and I hope that more orders will be gained. We, as Members must realise that there is a hell of a problem before us in dealing with the industry — "industry" includes the men, the management and everyone who is engaged in it — and we must resolve not to let it die, whatever the cost.

Dr. Norman A. Godman: I shall make only a brief contribution. One of my reasons for making a short speech is that I was not a member of the Committee which considered the Bill. I was a member of another Committee and felt that I could not be a member of two major Committees.
My reaction to the Minister's remarks can best be described as mixed. I regret his rejection of the new clause, no matter how gracefully it was expressed. On the other hand, I am pleased by the announcement of the order won by Ferguson-Ailsa for the research vessel for the Ministry of Agriculture, Fisheries and Food. The vessel will be built not in my constituency but at the sister yard in Troon. It is right that the order has been won by Ferguson-Ailsa, as it is the finest yard in mainland Britain for the building of small, specialist vessels. The order is to be welcomed by the management, the work force and the communities of Port Glasgow and Troon.
After a long, difficult and distressing period, things are looking up for Clark-Kincaid, which is the last marine builder on the Clyde. I am greedy for more orders to be placed. Ferguson-Ailsa and Clark-Kincaid are fine establishments, and I speak with some experience, having worked as a shipwright. Ferguson-Ailsa has just won an order for two supply vessels for the Canadian offshore oil industry. Those Arctic 2 vessels will work in the Beaufort sea. British Shipbuilders, and particularly John Peach and his sales team, has done well in winning such a marvellous export order for the Clyde.
We have to remember that the shipbuilding industry is important not only to the maritime communities in which a shipyard is situated but to the many firms in the marine equipment industry. There are far-reaching ripples from this type of order won by shipyards on the Clyde and elsewhere. Clark-Kincaid and Ferguson-Ailsa have fine work forces and good management teams. They have a first-class record in industrial relations and can build with the best not only in Europe but worldwide.
I suppose that I should get around to considering the Third Reading. On Second Reading the Minister of State said:
My right hon. Friend the Secretary of State for Northern Ireland and I propose to ask both organisations"—

the Minister was referring to Harland and Wolff, which is another fine yard, and British Shipbuilders—
in consultation with their unions to establish appropriate successor schemes by the early autumn of 1986. It is too early to predict the details of such schemes. They will be negotiated between the management and work force, just as in the private sector. However, at this stage there is no need to worry that the work forces may end up worse off." — [Official Report, 9 January 1985; Vol. 70, c. 793.]
I sincerely hope that that wish is realised by the outcome of the negotiations between the unions and management.
These events take place against a deeply depressing backcloth of a declining western European shipbuilding industry. On many occasions we have heard — I have not heard any hon. Member challenge the statement—that it is impossible for the western European shipbuilding industries to compete successfully with the South Korean and, to a lesser extent, Japanese shipyards.
My hon. Friend the Member for Wallsend (Mr. Garrett) mentioned that during his 20 years as a Member the discussions on the British shipbuilding industry had become gloomier in each succeeding debate. During the next decade we shall face even more formidable problems from China and perhaps Brazil.
I sincerely hope that if the Government intervene in any way in these negotiations about a successor scheme to the British Shipbuilders redundancy scheme they will make a

positive intervention and that the scheme that is initiated will be the equal of the one that the Government have decided to put asunder.

Mr. Bob Clay: On Second Reading, in Committee and tonight the Opposition have been and are trying to find out what the Bill tells us about the future of shipbuilding. We have to go a long way in a short time to satisfy those inquiries. We must have a far more satisfactory explanation that we have so far received as to why the Government wish to end the statutory scheme from the end of 1986.
What is so significant about that date? If there is nothing significant about it, why not review the scheme, as Opposition amendments have suggested? The Minister might then take another view. He could come back to the House. The scheme could be extended again or we could have further details of a subsequent scheme.
The Minister has hedged around the point a great deal, and various formulations have been used, but all that we have been told is that overall no one will be worse off. I can envisage all kinds of interpretations of those words in 18 months' time. I can think of many other circumstances in which Ministers have used such phrases. Later when we have found out what they mean, Ministers have said that matters were covered by their original words.
Can the Minister give us an assurance about the subsequent scheme? Will the scheme be a national one for whatever is left of British Shipbuilders—if anything is left—or will it be a port-by-port scheme? If the amount of money available for the scheme is the same—that is questionable — as it is now, plus inflation, will it be piled up for one age group if the management at that time is keen to get rid of that age group? Those are some of the questions that have not been answered.
I do not understand how the Minister can give any assurances, because the scheme is subject to negotiation between British Shipbuilders and the work force. How can the Minister be so sure about the outcome of the negotiations and that the scheme will be no worse than the present one?
Where will the money come from? We understood in Committee that the Government would be providing some money. It would be helpful if the Minister could give an assurance, before we give the Bill a Third Reading, that the Government will give a sum of money which will provide a scheme equivalent to the present one. We have not yet had that assurance.
The more we consider the matter and the more we question the Minister, the less satisfactory the answers become, and the more we have to stick to our original conclusion that something odd is going on, that there is some intention behind this, or that the Government are considering some options which we do not believe are in the best interests of the industry.
I do not wish to be parochial, but we all wish to make points about the industry in our area. I shall deal with Austin and Pickersgill, but I shall not run up any flags for it. Sunderland Shipbuilders' Deptford yard is on its last ship. We are waiting for a decision on the Morecambe bay exploration, which could guarantee an order for that yard. It is indirectly within the Government's gift to secure that order. Nothing has happened. That yard is beginning to go through the agonies that Austin and Pickersgill have been


through in the past weeks and months. It would be useful if some decisions could be made about future orders for Sunderland Shipbuilders' Deptford yard.
On Report, the Minister referred to the order secured by Austin and Pickersgill. He said that he would like to congratulate the management and the work force. We are all pleased about the order, of course, but the Minister might have mentioned the fact that 420 redundancies had been announced at that yard. That is how cavalier the attitude is now. If one order can be announced, 420 redundancies do not matter. Furthermore, as I understand it, even with the Oblendorff order there are probably more redundancies still to come.
I congratulate the local management, though somewhat halfheartedly, on what it has achieved. I certainly congratulate the shop stewards and the work force. However, I do not congratulate the Minister's Department, the chairman, the finance directors, or the senior management of British Shipbuilders. It is a disgrace that when that order was available—not for the first time—last September, it was lost because of a price gap of £2 million while the Government sat on their backside and did nothing. The order then suddenly seemed to reappear out of nowhere, and last Wednesday the shop stewards were told that if they did not agree to various conditions and sign them by Friday the yard would not get the order — it would have had it.
That was the situation that faced the workers last Wednesday. I congratulate them on not giving in to such disgraceful blackmail. In a nationalised industry, with national wage agreements, the shop stewards in one shipyard were presented with an ultimatum and told to sign for a two-year wage freeze, taking themselves out of national pay bargaining, within 48 hours. They were told that if they did not do so the yard would probably close. Is that the stage that we have reached? If it is, we need not wonder any more about what will happen after December 1986.
What will happen after the Ohlendorff order is completed? It is a sorry state of affairs. A yard originally designed to turn out 14 SD 14s a year has an order for two ships. There is a huge gap in the work programme beforehand, and nothing else on the order book. Yet that order is seen as manna from heaven — as salvation. Unless there are more orders, the order will merely give a few months' breathing space between crises.
What are the Government doing about the Ethiopian order? We have not forgotten about it because of Ohlendorff, although I suspect that the high-up management of British Shipbuilders has the worst intentions. It was not the local management that laid down the condition about the two-year wage freeze, and it was certainly not Ohlendorff. A German shipowner would have no cause to lay down such a condition. He is interested only in such matters as price and delivery.
When the question of price became crucial, the Government should have closed the gap. Instead, there was an attempt to make the work force do it by signing an agreement within 48 hours. I hope that such disgraceful tactics will not be tried again on workers in this or any other industry. I hope that the Government and Mr. Day will have learnt their lesson from the fact that the workers refused to give in to blackmail, that a reasonable agreement was eventually reached and that the order was still secured.
I hope that the Government will intensify their efforts to secure the Ethiopian order for Austin and Pickersgill, because the Ohlendorff order will provide only a brief respite for the industry on the River Wear. Sunderland Shipbuilders will soon, like Austin and Pickersgill, be in a state of crisis. The area is already soaked with redundancies, not only in shipbuilding but in many other industries, or what is left of them.
I do not like playing around with statistics, but I should like to give some that bring the scale of the problem home to me. At one school in my constituency, 80 per cent. of the children are on free school meals; at a second, 75 per cent.; at a third, 72 per cent.; and at a fourth 70 per cent. Sunderland has 26 per cent. adult male unemployment, one third of whom have been unemployed for more than two years. The rest have been unemployed for one year. Skilled workers are being made redundant from the shipyards and there are no apprenticeships. There is no other skilled work left in the town. The waves of redundancies pile up on that level of unemployment and the percentage of the long-term unemployed also increases. Literally thousands have been out of work for years. The effect on the community is terrifying. The yards are fevered with fears of redundancy and talk of redundancy and the Bill has made that ten times worse.
Nothing that the Government have said has reassured people. The Government's announcement that the scheme is to be ended in December 1986 is a message to people in my area to get out now. The message is that nothing will be certain and that the Government will do nothing to make people feel that they have a secure future. If they get out now, they argue, at least they will get what is going under the present scheme.
The events at Austin and Pickersgill confirm another worry. I should like the Minister to deny categorically that such merchant yards are being prepared for privatisation. The fear is that all of the yards on the River Wear are being slimmed down and having bits and pieces sub-contracted out as part of the push to get the work force to accept the conditions that will come with privatisation. It is clear that those who are playing around and, in some cases, holding orders off and are trying to get things out of the work force before allowing them an order are the very people who intend to buy the yards. Such has been the process with the warship yards.
People in communities around the yards expect either closure or privatisation. If that is what the Government intend, they should come clean and let us know what we are up against. I assure the Government that we know how to deal with that. If the Government intend to let the industry continue to sink by not securing orders and keeping the order books unfilled, and to stave off crises with an order from time to time so that the management can regroup and get the next lot of redundancies through, they should not assume that there will not be resistance such as has been put up and is being put up by the National Union of Mineworkers. Shipyard workers have learnt much from the NUM about defending their jobs and communities. They will not allow the Government to leave the industry to die or to hand it over to the private owners about whom my hon. Friend the Member for Jarrow (Mr. Dixon) spoke so eloquently.

Mr. Frank Field: I wish to make two brief points. First, in a sense this debate, and many others, represents


a paradox. The Government could make a case for the amount of support that they have given British shipbuilders. Since 1979, £1 billion of taxpayers' money has been put into the industry, yet it is in a crisis. Some people would argue that that is because that sum is not adequate for the size of the problem, but it is also because of the way in which the Government have brought forward the plans for that spending.
Since 1979, the industry has staggered from crisis to crisis, and the Government have responded by changing the borrowing requirement. We have never been able to have a debate about the long-term structure of the industry and the funds needed to support it. Therefore, my first charge against the Government is that they have displayed the politics of caprice and, almost, of madness. They have put considerable sums forward, but never in such a way that we could rationally debate how best to preserve British shipbuilding.
Secondly, I wish to relate what has been happening at Cammell Laird to this measure. Many hon. Friends and hon. Members will know that in the summer there was a dispute at Cammell Laird, although the majority of workers had three mass meetings to reject industrial action. The workers decided privately and collectively to accept the tap on the shoulder to be told that they did not have a job, providing their sacrifice would be matched by the survival of the yard. There were two reasons for that decision. First, there was a redundancy payment scheme and therefore some compensation for making the sacrifice. With this measure, that compensation will no longer be available. Secondly, they hoped that others in the yard, and possibly their children and grandchildren, would have a job in the yard. My second charge against the Government is not that this is a scrappy, nasty, little measure — it is that — nor that they have not spent considerable sums supporting the industry but the courage and sacrifice of the workers at Cammell Laird and other yards in willingly taking redundancy so that the industry can survive, has not been matched by Government vision about the industry's future.
The debate is not merely about the winding up of the redundancy payments scheme, nor about the fact that the Government have not put forward considerable sums of taxpayers' money. It is about a charge against the Government that since 1979 we have never had a proper debate about the needs and future development of the British shipbuilding industry, and the resource that will be necessary to safeguard its future.
Throughout the years we have had endless debates, but always in crises, always trying to patch up differences and always knowing that after a few weeks we would be back with another crisis and a demand for more money. When the Minister replies, I hope that for the first time since 1979 he will give us some idea of when we shall debate a corporate plan for the industry.

Mr. Malcolm Bruce: I wish to be brief, but nevertheless I wish to endorse the comments made by Opposition Members. I have a direct personal interest, especially in the comments of the hon. Member for Birkenhead (Mr. Field). I was born within a mile of

Cammell Laird and my grandfather worked in the shipyards at Hebburns. There is genuine distress that these yards are under threat at present.
I ask the Minister to address two matters that arise from the measures contained in the Bill. In Committee, the Minister said that the Government would be prepared to introduce a topping-up scheme to follow the present one. Opposition Members would prefer the present scheme not to be terminated, but the Minister said that he recognises that any scheme that follows will need a topping-up element. How much will the Government provide in that scheme? Unless we have some guidance on that, many workers will opt for the present scheme because they will be unclear about what may follow. The Minister has an obligation to explain to the House what sort of topping-up the Government will endorse.
I have many constituents who work at the Hall Russell yard, which is favoured for privatisation. Let us leave aside for the moment whether we believe privatisation to be desirable. I said in Committee that the yard was successful when it was in private ownership, and may be so again, but it has not been helped by being kicked in and out of the private sector for the past few years. The preferred option—expressed both privately and publicly—is that it should be privatised, together with Yarrows. However, during the past week, it has become clear that that is unlikely to happen. The Yarrows management pulled out of the deal because the workers at that yard were not committed to it.

Dr. Godman: Is it not the case that a certain Mr. Iain Sproat has expressed an interest in acquiring that yard?

Mr. Bruce: That is true, but I am not sure whether it is his money. I suspect that he is acting on behalf of people who have money. Nevertheless, the consortium of which Mr. Sproat is a spokesman has expressed interest in the yard. My concern is only that the yard should continue to be as successful as it has been. I am not convinced that privatisation is helpful, and what has happened during the past two or three weeks has produced an uncertainty that the yard could do without. The yard was successful in the private sector, but it was also successful in the public sector. How can it be in the best interests of the community and the work force to have such uncertainty, with offers being made and then withdrawn, and new offers coming forward?
More specifically, will the Minister now recognise that he will not obtain a quick and easy settlement of his privatisation deal, and that the period will have to be extended to ensure that all offers are considered? The most likely offer has been withdrawn, and the one still on the table has not been considered properly. He has an obligation to tell the House what will happen.
On Second Reading and in Committee the Minister said that the Government would introduce a topping-up scheme, but he has not said how much money will be involved. The uncertainties in the industry—

Mr. Dixon: Does the hon. Gentleman remember that the Minister said that the public sector schemes would be exactly the same as the private sector ones? How can he top up the public sector schemes if they are supposed to be the same as the private ones? Will he also prop up the private sector schemes?

Mr. Bruce: The hon. Member for Jarrow (Mr. Dixon) knows that I share his scepticism about the scheme. In


Committee, we persuaded the Minister to agree to top up the scheme, but he has not yet said that he will top it up to the same level. Unless the Minister assures the House tonight that he will do so, there is likely to be a mass exodus from the industry because the workers will lack confidence in what he has said. Unless he is prepared to say to the House that the Government recognise the need to ensure that any follow-on scheme will be topped up to the same level as the present scheme, the shipbuilding industry will be faced with a continuing crisis. He has said nothing on Second Reading or in Committee to reassure hon. Members who represent areas in which shipbuilding is important that the industry will be supported by the Government for the foreseeable future.

Mr. Geoffrey Robinson: The remarks of the Parliamentary Under-Secretary on wasting time while he has tried to duck out of the debate will have done nothing to improve his hapless reputation for putting his foot in it. Not only was he not present for any of the preceding debate, for the best part of which I was present, but I think that it is very wrong of him to imply that the preceding debate in any way was wasting time any more than this important debate on the shipbuilding industry in any sense has been a waste of time. I hope that he will reflect on those remarks and try to stop putting his foot in it in future.
We have heard contributions from nearly all the major shipbuilding regions in the country, particularly those represented by Opposition Members. My hon. Friend the Member for Newcastle upon Tyne, East (Mr. Brown), in a powerful and logical indictment of the Government's proposals, referred to Swan Hunter. He and others of my hon. Friends were at a meeting earlier this evening with the managing director and industrial relations director of that company. In the course of the meeting, they made it clear to us that they were indeed ambivalent, if not worried, about privatisation and specifically about the provisions of the Bill for the termination of the scheme in December next year. They could not see the reason for this, and they will be making separate representations to the Government such as we will expect from other yards remaining within the public sector and those being privatised.
We heard also some powerful, emotional and emotive contributions from my hon. Friends the Members for Wallsend (Mr. Garrett), for Sunderland, North (Mr Clay) and most particularly for Jarrow (Mr. Dixon).
In the regional communities we would put it to the Government again that, as with the mining area communities, unemployment is already very often as high as 50 per cent. The unemployment is often made up of the long-term unemployed, those who have been unemployed for over one year. When my hon. Friend the Member for Jarrow referred to the practices of management in that industry, it reminded me of the practices of management in the motor cycle industry that brought that industry to its knees. No investment was being made in plant and machinery—the very fact which was so accurately and relevantly given by my hon. Friend the Member for Jarrow. This happened in the motor cycle industry in which we dominated the world market, just as we did in shipbuilding. We had 70 per cent. of the world market, not one penny was going into the industry, but the wife of the chairman was driving round Monte Carlo in a gold-plated

Daimler, the late Lady Docker. That sort of attitude on the part of management has led to the crisis situations that we face in many of our traditional industries.
As to the spectre of privatisation, that was odd coming from the former leader of Wandsworth borough council, who pioneered so much of it with such enthusiasm. I refer to the hon. Member for Southampton, Itchen (Mr. Chope). I am pleased to note that he has remained present at least to hear these remarks. I hope that the spectre will come to haunt him as he now represents Southampton, Itchen. The Opposition would agree wholeheartedly with those sentiments, although they are not ones with which we would readily associate the hon. Gentleman.

Mr. Chope: It is clear from what I said that I was expressing concern about delay in the privatisation in Southampton.

Mr. Robinson: I am sure that I need add nothing further to that. I will leave it to the constituents of the hon. Gentleman to interpret the obvious lack of concern that he has for them and the evident concern that he has for his own prospects on the Government Benches. There were further contributions from my hon. Friends the Members for Greenock and Port Glasgow (Dr. Godman) and for Birkenhead (Mr. Field), who accurately spoke of the crisis that we face.
However, of course, this could be an industry of the future. After all, shipbuilding is not a dying industry. It is an industry in which there are applications for the new technologies. If we do not have those, where will the new technologies be used? Where will the new materials be used? Where will the robotics be used? Shipbuilding is there for control technology, for computer-aided design and manufacture. Without those applications in industries such as shipbuilding, those new technologies have nowhere to go for their application. That is why we are doing so badly in them, as the Parliamentary Under-Secretary knows only too well. In that situation, as many of my hon. Friends have said, all that the Government can do is talk about redundancies and make it clear to the House that they want as quickly as they can to wash their hands of any responsibilities in that respect, be it to the private sector or the small part of the public sector that they intend to retain.
We need a maritime plan that would involve the shipbuilding industry, both military and commercial, and the engine-building capability, both military—where we are totally dependent on foreign licences — and commercial. We need a policy that would link Government purchasing power to shipowners based in the United Kingdom. We need a rolling and committed programme from the Ministry of Defence. To none of those things has the Parliamentary Under-Secretary given us anything more than an evasive reply. We have had his tortuous, tortured remarks and self-contradiction of, "Now we all understand that it will all be levelled down." In other words, we shall have parity—not the parity of the existing national statutory scheme, but the parity of some punitive scheme that will apply equally to the public and private sectors.
Tonight the Parliamentary Under-Secretary has lost the argument, and he knows it. He has lost it because he never had an argument. The Government's approach is negative and pathetically inadequate. We can look forward to the future only with grave doubts and many fears for the industry, which the debate has done nothing to alleviate.

Mr. Butcher: I thank the hon. Member for Coventry, North-West (Mr. Robinson) for doing his impression of a Front Bench peroration, some parts of which we have heard before, some parts of which were unnecessary, and some parts of which were thoroughly and comprehensively inaccurate. If the hon. Gentleman had done his research, he would have found that the proposals that he put forward on new clause 1 were irrelevant. They would have taken twice as long as would be required under our proposal to give effect to virtually the same measure. Purely as a side issue, they would have made it very difficult for us to write off the national loans fund liability, for which we need legislation. That would have been the import of the hon. Gentleman's proposal.
I should like to clear up some of the general observations that were made. I do not know why we got involved in a post-mortem, but the hon. Member for Newcastle upon Tyne, East (Mr. Brown) seemed to imply that there was a difference between my right hon. Friend the Secretary of State for Trade and Industry and the Department on the placing of the type 22 orders. I know that the hon. Gentleman had a problem in the previous debate in checking records and establishing hard data. If he looks at the debate on 9 January, he will find that I said:
We equally recognise the concern in each"—
that is, all three yards—
at the time it has taken to reach that decision, but it is essential that in reaching it we take fully into account all the factors, including the requirements of the Navy, the cost to the taxpayer, the performance of the yards and their need for work."—[Official Report, 9 January 1985; Vol. 70, c. 837.]
After that other factors are mentioned.

Mr. Nicholas Brown: The Minister is right in what he has read out, but then I rose, as I am rising now, to pin down the hon. Gentleman on whether competitive factors alone were to be taken into account, or whether wider social questions were to be taken into account. The Minister of State, who was sitting next to him, grinned because he realised the point. It was then that the Minister gave the answer that I read earlier, which was a precise pinning down to competitive factors alone. Then the Secretary of State went on to announce something quite different.

Mr. Butcher: Does the hon. Gentleman agree that the biggest social factor in any constituency is the need for work — the rate of unemployment? Does he agree that the need for work is at the heart of any constituency's difficulties, in its social, welfare and other programmes? Is not the best way to ease demands on welfare programmes to increase the level of employment in a constituency?

Mr. Nicholas Brown: rose—

Mr. Butcher: I shall not give way to the hon. Gentleman again on this point. He is either deliberately misunderstanding it or he has difficulty in deciphering the clear language of Hansard.
The hon. Member for Birkenhead (Mr. Field) said that we do not debate the corporate plan, and that we need opportunities for bigger and broader debates to show where we are going and what the future of the industry is to be. I understand his concern, and that was a legitimate point. He will know that on 25 July my right hon. Friend the Secretary of State made a statement to the House on

the 1984 British Shipbuilders' plan. The usual short debate that followed was dominated by doctrinaire arguments about privatisation, despite the fact that the plan had been made available to the House. Since then we have had several debates on various aspects of shipbuilding. On no occasion have the Opposition used the opportunity to challenge or debate the plan. Have Labour Members taken the trouble to go to the Library and to look at it? As usual, it is available there.
While we are on the subject, I hope that some Labour Members will join me in the hope—it is not too forlorn a hope, and may even be a distinct possibility—that the 200,000 compensated gross registered tonnes target in the corporate plan will be met in orders taken in this financial year.
I found the intervention of the hon. Member for Sunderland, North (Mr. Clay) disgraceful. He should at least celebrate those two orders with us. He should recognise that the improvements for which the corporate management is asking in working practices and unit labour costs at that site are necessary. He will be aware that the unit wage costs at that site are higher than they are in some of the neighbouring sites. That is a legitimate target for the corporate management to try to bring in, in the light of the new order.

Mr. Clay: Will the hon. Gentleman accept that the nearest that British Shipbuilders has ever been to breaking even came during the 1982 financial report — when it got to within £19 million of breaking even, within the £25 million limit set by the Government — when it had a throughput of 400,000 tonnes? That corporate plan was suggested by the previous chairman, and it is only since the present chairman took over that there has been talk of the 200,000 tonne limit. That is one of the problems of British Shipbuilders.

Mr. Butcher: In his speech, the hon. Gentleman made comments about the previous and present chairmen. Time will tell, but at the moment the present chairman is out there fighting for orders. Some of the recent observations of the previous chairman do not seem to hold up under close examination. It would be far better if he spent a little less time justifying some of his past decisions, and a little more time in looking at the future of the industry. I am prepared, as the House should be, to give Graham Day the credit for fighting for the industry. He is out there now getting orders, and he will come back tomorrow, we hope, with an announcement on further orders. He is motivated to look after the interests of the industry, and I resent the comments made by the hon. Member for Sunderland, North and the way that he has sought to ascribe motives to the current chairman that are not of the best possible kind.
The hon. Member for Sunderland, North talked about the Scargill factor. It is regrettable that that was introduced into the debate. There will be another debate on another occasion, when no doubt that will be examined. I recall that my last visit to the north coincided with the day when the hon. Gentleman, who I understand is proud of being a member of the hard Left or is on the borderline between hard and soft Left, was having a contretemps on the picket lines. I recall that the hon. Member got the kind of publicity which no doubt he welcomes. When he talks about the Scargill factor, I would advise him, through you, Mr. Deputy Speaker, not to seek to link it to the


shipbuilding industry, because one day people will discover that the Scargill factor caused great sadness and great bitterness.

Mr. Clay: The record will clearly demonstrate that I never used the name "Scargill" in any of my contributions. This indicates the hysteria on the Government Benches about the mining dispute. Conservative Members can talk about nothing but that particular name. I talked about massively high rates of long-term unemployment. Unemployment is a factor in both the mining and shipbuilding industries. In my constituency there are both mining and shipbuilding communities. That is why people are sick and tired of the Government's attitude. For the Minister to get up and talk about the Scargill factor when we are trying to talk about the fear of long-term unemployment in both mining and shipbuilding communities which are suffering from the same problem shows the Government's total lack of understanding and care.

Mr. Butcher: Members of the hard Left, both inside and sometimes outside the House, come dangerously close to celebrating human misery. They may view that as a driving force for their political ends, but the hon. Gentleman did not find it possible in his contribution to celebrate what could be a future for the yard about which he made representations both to the Department of Trade and Industry and in Committee upstairs.
When Opposition Members, in the context of shipbuilding, talk about the Government's social responsibility, they correctly say that there are other aspects of Government policy which should be of help in these hard-pressed regions and constituencies. Therefore, I remind the House once again that, in terms of regional aid alone, not even including Department of the Environment aid, since this Government came to power aid to Wearside has amounted to £31 million. In Teesside it amounts to £181 million, in North Tyne to £57·8 million and in South Tyne to £50·3 million. In Scotland — across the four travel-to-work areas where shipbuilding is still a major source of employment — we are talking about £137·6 million of aid. In Birkenhead the aid amounts to £174 million. That is not the behaviour of a Government who do not recognise that there are other ways of tackling the problems which Opposition Members have—

Mr. Nicholas Brown: Will the Minister give way?

Mr. Butcher: No. I gave way to the hon. Gentleman on two occasions in the last debate. Once was certainly enough tonight.
The hon. Member for Jarrow (Mr. Dixon) made an obviously heartfelt contribution. I have already said that I cannot go along with the assertions that he made about the current chairman of British Shipbuilders.
The hon. Member for Wallsend (Mr. Garrett) linked his comment with a comment made by the hon. Member for Birkenhead and asked whether the industry has a future. That depends upon a number of factors. It has never been within the gift of an Industry Minister, of any political complexion, to say that there shall be a shipbuilding industry with a merchant sector of a certain tonnage for a certain period of years. The market that affects that question has always been out there somewhere. What we have said in the House ad nauseam is that this

Administration — like the previous Administration — recognise that, given that there is not a free market in international shipbuilding and that subsidies are paid by all of our international competitors, we have legitimately to do something to stay in the race. Would that we did not. It is absolutely right that my hon. Friends should fight for fairer competition so that we can escape from the subsidy spiral.
It is our duty to keep our industry in the race and not to throw public money at problems such as unit wage costs, new procedures and new investment, which may therefore be more difficult to solve. Through the intervention fund and other measures, we should find room to manoeuvre for our domestic shipyards.
The hon. Member for Gordon (Mr. Bruce) understood the Bill's basic point. An employee cannot opt to be made redundant. He must be asked if he wishes to be made redundant by the employer, who must first declare the redundancy programme. I cannot remember the hon. Gentleman's exact words, but whole droves cannot say that they wish to take advantage of the scheme in spite of the fact that a shipyard may not want a particular redundancy programme. Workers cannot exit in large numbers.
I was asked whether the deadline of 15 February can be extended for the bidders of a yard about to be privatised. Yes, the deadline will be extended if existing bidders have difficulties and—

Mr. Gerald Malone: Is my hon. Friend aware that the management of Hall Russell shipbuilders advised me yesterday that an extension of the deadline was not necessary and that our right hon. Friend the Secretary of State had been advised of that? Indeed, the management of Hall Russell no longer wishes the deadline to be extended, it having reconsidered its position over the weekend.

Mr. Butcher: I am grateful to my hon. Friend. I shall confirm that in the aftermath of the debate.
I commend these words to Labour Members:
The Bill was not introduced in any way as part of a plan for redundancies. We do not have such a plan. It is designed to cope with the redundancies which will inevitably occur. I agree that it is not a happy Bill. We should have preferred not to introduce it, but we believe that it is right to do so and we ask the House to pass it."—[Official Report, 7 February 1978; Vol. 943, c. 1416.]

Several Hon. Members: rose—

Mr. Butcher: No, I shall not give way.
Hon. Members should know that those are the words of the right hon. Member for Manchester, Gorton (Mr. Kaufman). He said then what we have to say now. We wish that the Bill was not necessary—

Mr. Bruce: I asked specifically what kind of topping-up scheme the Government would contemplate to succeed the present scheme, and the Minister has not answered that. I should be grateful if he would tell the House.

Mr. Butcher: That question was answered in Committee. The Government have said that they are prepared to cover the costs of the successor voluntary scheme within BS. The hon. Gentleman will recall that he asked the question in a slightly different way. He asked whether it was self-funding. The answer was that the transaction is neutral.

Mr. John David Taylor: The Minister has referred only to BS. Will he explain the position in relation to the biggest shipyard in the United Kingdom?

Mr. Butcher: The right hon. Gentleman should be aware that the scheme is identical for Harland and Wolff. That yard too will be covered by a December 1986 deadline and will be given exactly the same detailed payments at exactly the same rate as will pertain on the mainland of the United Kingdom.

Mr. Taylor: I accept that the present arrangements are identical throughout the United Kingdom, but when the present scheme lapses will the future arrangements for Harland and Wolff be identical to those for BS?

Mr. Butcher: It is up to the managements of BS and Harland and Wolff to negotiate their voluntary arrangements, given the guidance of my hon. Friend the Minister of State.
I ask hon. Members to accept this innocuous Bill, which deserves the support of both sides of the House.

Question put and agreed to.

Bill read the Third time, and passed.

Orders of the Day — MILK (CESSATION OF PRODUCTION) [MONEY] (NO. 2)

Queen's Recommendation having been signified—

Resolved,
That, for the purpose of any Act resulting from the Milk (Cessation of Production) Bill ("the Act"), it is expedient to authorise the payment out of money provided by Parliament of any payments made under the Act by a Minister of the Crown for the purpose of compensating persons, who are or have been registered in the direct sales register or a wholesale register maintained under the Dairy Produce Quotas Regulations 1984, for reducing milk production.—[Mr. Boscawen.]

Orders of the Day — Milk (Cessation of Production) Bill

Not amended (in the Standing Committee), considered.

Clause 1

PAYMENTS TO PERSONS CEASING MILK PRODUCTION

The Minister of State, Ministry of Agriculture, Fisheries and Food (Mr. John MacGregor): I beg to move amendment No. 1, in page 1, line 11, at end insert—
'(1A) for the purpose of compensating persons who are or have been registered milk producers for reducing milk production, the Minister may make payments to such persons who have undertaken—

(a) to reduce their production of milk for sale or for the manufacture of any milk product for sale; and
(b) to surrender part of their milk quotas to the reserve.'.

Mr. Deputy Speaker (Sir Paul Dean): With this it will be convenient to discuss Government amendments Nos. 2 and 10.

Mr. MacGregor: The amendments honour a commitment that I gave in Committee in response to amendments tabled by the hon. Member for East Lothian (Mr. Home Robertson) and for Ceredigion and Pembroke, North (Mr. Howells). Their amendments would have made it possible for compensation to be paid to producers who reduce production as well as those who give it up altogether. I accepted that it would be sensible to amend the Bill in this way and undertook to propose amendments on Report.
The purpose of tonight's amendments is to provide authority for payments to be made to producers who cut production and surrender a portion of their quota as well as producers who surrender all their quota.
It may be helpful for the House to know the background to the amendments. They do not apply to the present outgoers' scheme, which is non-statutory. I stress that current Community legislation does not permit payments to be made to producers in return for partial surrender of quota. Under article 4 of Council regulation 857/84, which permits the national outgoers' scheme, producers must discontinue production definitively—that is, entirely.
We have no intention of altering the existing non-statutory scheme. We do not intend to introduce a new scheme to allow partial surrender even if Community legislation allowed it.
We are introducing legislation in the Bill to give the cover of primary legislation for any future schemes of whatever type for the convenience, I hope, of the House now and in the future.
We do not have any future schemes in mind, but it makes sense to give appropriate flexibility to any future schemes. Partial surrender of quota would introduce further flexibility into the quota system. It is, therefore, sensible to provide the necessary enabling legislation. I commend the amendments to the House.

Mr. Brynmor John: We are grateful to the Minister for meeting the serious points made in Committee and for recognising a serious omission from the Bill. The partial surrender of quotas could make available milk which could help the dairy industry in its critical state.
The Minister is right that the provision will have no present benefit, but I hope that he will not dismiss out of hand the need for a scheme and will seek approval in the EEC for some partial surrender policy.
The amendment, welcome though it is, shows how ill-considered and rushed the original scheme from Brussels was. Nevertheless, a needless restriction has been removed and for that we thank the Minister.

Mr. Geraint Howells: The Minister promised in Committee to table an amendment, and I am grateful to him for keeping his word. I hope that what he has done will benefit dairy producers in the years to come.
It is a shame that part of the quotas could not have been given up before. More than 240 small farmers in Wales have gone out of dairy production. As I said in Committee, the Government have had their priorities wrong. They should have gone for the big dairy farmers first, leaving the small dairy producers as family units. Because of the policy that they have pursued, we have lost too many small dairy farmers.

Mr. James Nicholson: I welcome the concession that the Government are making because it will help large dairy farmers to contract and have an easier time running their farms. They will be able to sell their extra quota; or they may wish to lease it, although the Minister wants them to sell it.
I am concerned about the lack of uptake in Northern Ireland of the buyers scheme. The amendment will be of no help in that respect because the scheme has been a total disaster. Indeed, I described the Bill as a disaster in the House on 10 January, and as the amendment will be of no help to Northern Ireland, I can only continue to regard the measure as a disaster.
An effort was made to buy out 66 million litres of milk in Northern Ireland under the buyers scheme. I understand that only a little in excess of 10 million litres has been bought, or one sixth of what had been hoped for. Apparently the buyers scheme is to be renewed and producers will be informed of its continued operation. For how long will it be open? While I do not wish to seem a pessimist, I fear that the renewed scheme will be no more successful than the earlier one. However, I wish the Minister luck with it.
How much milk will be awarded to expanders in Northern Ireland? The Department said that the expanders would receive 46 per cent. of what had been awarded, as against 57 per cent. in Scotland, and the percentages for England and Wales have yet to be decided. Again, therefore, Northern Ireland has lost out. Not only did we lose the 65,000 tonnes—I will not go into detail on that tonight; the Minister is aware of the point I am making—but we are also losing out in percentage terms.
Only 25·7 million litres are available to meet the expanders in Northern Ireland, and that is not enough milk to go round. The scheme has been a total flop and something must be done to bolster the scheme in Northern Ireland. Perhaps the Minister will answer some of the suggestions I made when we last debated the subject.

Sir Peter Mills: I support the amendment as it is right that the provisions within it should be on the stocks and ready for use in future. It is obvious that we need more milk producers to surrender



part or the whole of their production so that their quota can be reallocated towards other dairy farmers to make them viable.
The problems that the quotas have produced are so serious that the Community should consider the amendment carefully and that which the Government are seeking generally to do so that a part or the whole of the surrendered production can be reallocated to other dairy farmers. This problem overrides all others in farming and I should like to see further financial funds found from the Community, or possibly from the Ministry of Agriculture, Fisheries and Food, so that it can be overcome. I believe that farmers are prepared to give up some of the grants and other benefits that they are obtaining from the Ministry and the Community so that the problem can be tackled.
We have taken a small step forward, and I hope that the Minister will press strongly at Brussels to enable the surrender of part of the production of milk to become a reality. I hope also that the Community will find more money so that farmers can get out of the milk production and make other units viable. Something will have to be done, and I trust that my hon. Friend the Minister of State will take what I have said extremely seriously.

Mr. David Penhaligon: I welcome this sensible and rational amendment, and I am pleased that it is to be incorporated in the Bill. The Government must have been ill prepared when they accepted the original proposal that lies behind the Bill in the absence of the amendment. It is inconceivable that the Commission would not have agreed with the contents of the amendment at the time when the regulations were proposed. It is interested only in reducing milk production, and it seems that it is not really interested how that is achieved.
When the deal of £650 over five years was offered to farmers, I did not think much of it. I have been surprised, to some extent, by the interest that dairy farmers within my constituency have shown in it. Enormous interest was shown initially by many dairy farmers throughout the country, but the number putting a signature on the dotted line at the bottom of the page has not been overwhelming. The hon. Member for Newry and Armagh (Mr. Nicholson) has told us of the serious position in the area which he represents.
I shall be interested to know whether the Minister believes that the outgoers scheme will adequately buy, as it were, the quota system. That is crucial and I should like to know whether the buy-out scheme is on target. It will be interesting to know the size of the farm that is now covered by the scheme as it is gradually extended. Some of those running small farms rejected it when they had had time to analyse it. We should have that information before we make judgements on the following amendments.

Mr. Anthony Nelson: I intervene briefly to support the amendment. It is welcome, albeit to the extent that it is jam tomorrow.
I have received some allegations from dairy farmers in my constituency about which I have written to my hon. Friend the Minister of State. It seems that under the outgoers scheme the funds available will account for only about a third of the applications that are received. Unless further funding is made available, possibly at the expense of the capital grant scheme elsewhere, for the outgoers scheme, there will not be sufficient money to pay the applicants. If that is the case, a great many dissatisfied


customers will be queueing at the door of the outgoers scheme. If that happens, there will presumably be even greater pressure for the type of scheme proposed by my hon. Friend the Minister from those who apply but are rejected because funds are not available from the outgoers scheme. Even though that scheme will not be implemented immediately, I suspect that there will be an increased demand for this measure — I presume that my hon. Friend will press for it in the Community — because there will not be sufficient funds under the outgoers scheme, which, as my hon. Friend said, is a separate scheme.
12 midnight
I hope that my hon. Friend the Minister will fight his corner and go in battling to press for funding for such a scheme and for it to be sanctioned by the Community. I have written to my hon. Friend about one priority that should come first—interchangeability. Although that is separate to the proposed amendment, it is important. To a large extent, it should be afforded a relatively nil cost to the Community in that there is an offset between the increased quotas for production for direct sales and the decreased quotas for production for wholesales. As I understand it, this cannot be permitted under Community rules, although the Government are sympathetic to the idea. They propose that this measure should be allowed by the Community.
I hope that interchangeability will be given immediate priority, because I believe that it will immediately end injustice to those who had the foresight years ago to shift out of wholesales and into direct sales. Those people are prejudicially affected compared with farmers on the next form producing similar amounts with the same type of dairy herd. This problem needs to be tackled first, and I hope that, in pressing the Community for funds for the scheme, my hon. Friend the Minister will not forget the need to press for interchangeability.

Mr. John David Taylor: The Minister is well aware that milk production in Northern Ireland makes a greater contribution to that region than milk production does in many other parts of the United Kingdom. The Minister, therefore, understands that the controversy during the past 12 months about milk quotas has had a greater political impact in Northern Ireland than it perhaps has had elsewhere in the United Kingdom. As the Minister is aware, Northern Ireland is the one part of the United Kingdom that is liable to milk quotas and superlevies.
We shall need greater assurances from the Government if my right hon. and hon. Friends are to find it possible to support the Government on this measure. Can the Minister assure us that quotas within the United Kingdom will be transferable on a regional basis? Will the hon. Gentleman assure us that next year Northern Ireland will receive the 65,000 tonnes which seemed to disappear last year?

Mr. MacGregor: I think that it is right to remind the House that this is a comparatively narrow amendment and does not relate at all to the existing scheme. Nearly all the points have been about the existing scheme. For the sake of good order, it would be more appropriate for me to reply on Third Reading to a number of the points that were made about the existing scheme. I believe that that would be the

correct way in which to tackle this matter, because I have no doubt that other general points will be made. This approach will enable me to deal with them all at once.
If I had not listened to the debate in Committee, the hon. Member for Truro (Mr. Penhaligon) would have accused me of having had a closed mind and not being open to reasoned argument. As I did listen to the debate, he has accused me of not having thought of the point before and of not having brought forward the Bill in a form so complete that there would be no point in discussing the Bill in Committee. I cannot win with the hon. Gentleman. I hope that on this occasion he will be graceful and allow that the way I did it was right, and support the amendment.

Amendment agreed to.

Amendment made: No. 2, in page 1, line 13, leave out 'such payments may be made' and insert
'payments under subsections (1) and (1A) above may be made; and such a scheme may make provision as to payments under one or both of those subsections'.—[Mr. MacGregor.]

Mr. John Home Robertson: I beg to move amendment No. 3, in page 1, line 16, leave out 'may' and insert 'shall'.

Mr. Deputy Speaker: With this it will be convenient to consider amendment No. 4, in page 1, line 17, leave out 'or instalments'.

Mr. Home Robertson: This is about the scheme which is operating at present. I do not want to encourage people to have a wide-ranging debate, but it would be relevant on this group of amendments.
The first purpose of these amendments is to make it obligatory for cash payments to be made under the scheme. The second purpose is to provide for the payments to be made as a lump sum instead of by instalments. It is envisaged by the scheme and the legislation that cash payments by the Government will be mandatory and therefore I shall not dwell on that point. Our main objective is to require the Government to pay the outgoers' payments in a lump sum instead of in dribs and drabs as is happening at present.
Throughout our proceedings, the Minister and his right hon. Friend the Minister of Agriculture, Fisheries and Food have made much of the horrors of negotiating with the Chancellor of the Exchequer. We sympathise. It must be distasteful to have to be within spitting distance of him, but it is one of the hazards of being a member of the Tory party.
The Minister of Agriculture, Fisheries and Food went along to the Chancellor of the Exchequer and he made great play of the fact that he obtained £50 million for the scheme. There is considerable doubt about whether that £50 million is worth £50 million, for reasons that I shall develop later. There is a difference between £50 million cash down and £10 million a year for five years. To be precise, in real terms there is a difference of approximately £10 million if we allow for interest at 10 per cent. on those deferred payments. The difference might be substantially more if we allow for higher interest rates such as those we are experiencing at the moment, and continuing inflation.
The value to the outgoers of the final £10 million instalment could be wiped out as a result of inflation and interest rates. The Opposition have already said that the funding for the scheme is pathetic and far from adequate. There is widespread support for that view from all parts of the House and throughout farming. The national


farmers unions in England, Scotland, Wales and practically everywhere else agree that the scheme does not go as far as it should if we are to release the amount of quota required for a number of essential purposes.
The Minister said that he had £50 million for the outgoers' scheme, but, as I have sought to argue, the real value to farmers will be closer to £40 million.
A small dairy farmer with 40 cows who takes part in the outgoers' scheme and who received the full payment all at once would have a lump sum of £26,000. It is a substantial sum of money and it would probably be sufficient to enable him to invest in building a different type of livestock enterprise or to buy machinery to change his system from grass to arable cropping. He would also be eligible for capital relief for tax purposes on the money, if he used it in that way.
However, as the Government are at present operating the scheme, that will not be possible. The hypothetical farmer with 40 cows will be given £5,200 a year for five years. Because of the nature of those payments, they are likely to be taxed as income. With £5,200, at current prices, one could pay for about half a tractor. If, in order to restructure his farm, the farmer borrowed enough money to realise, say, £26,000 — which is what the gross figure would be if he received the full value of the compensation—the effect of interest and inflation, with the five yearly payments, would reduce the value to the farmer of the total compensation by at least £5,200 in real terms. By the time the fifth payment was made, it would already have been swallowed up in bank interest alone.
In earlier debates we have emphasised the need for adequate funds to create new enterprises in place of the dairy units being shut down under the quota scheme. We have also said that we doubt the wisdom of winding up only the smaller dairy farms, as is happening under the scheme. The phased scheme is of very limited value as an incentive to restructure farms. Indeed, a farmer will only be able to invest in alternative enterprises if he borrows money and adds the risks attached to substantial borrowings to the trauma caused by breaking with his traditional livelihood in the dairy industry.
A single lump sum payment could be much more effective. Such an approach to the scheme would make it possible for people to restructure their farms, remain in some kind of production and continue to provide employment. Its virtues are self-evident. I invite the Minister of State to accept the amendment. I invite him to ask the Chancellor to honour in real terms his undertaking to pay £50 million for the outgoers' scheme. It would be in the Chancellor's interests to do so. He is reaping the benefit of the reduction in the cost of intervention and of the rest of the CAP so far as it involves the dairy industry.
Like myself, the Minister of Agriculture, Fisheries and Food, is a farmer. I am sure that when the right hon. Gentleman sells a tonne of grain after the harvest, he does not offer the merchant extended credit terms. He expects money on the nail. Perhaps the Chancellor of the Exchequer should not be allowed to get away with extended credit terms. There is ample justification for making capital payments to enable people to restructure their farms and for providing full capital compensation at the start rather than paying out the money in dribs and drabs.

Sir Peter Mills: I cannot agree with the hon. Member for East Lothian (Mr. Home Robertson). To give a capital

lump sum in compensation would be most unwise. It would create enormous practical problems. I do not wish to be rude to the Opposition, but the suggestion simply shows their lack of experience of what happens in a market when a large sum of money suddenly descends on it. There would be an enormous distortion in the prices of store sheep and store cattle, as every farmer taking advantage of the scheme suddenly tried to buy store cattle, beef cattle or sheep.
There would also be a serious effect on other agricultural production. My experience as a practical farmer is that other sections of production are worried about a sudden and large influx of money. Opposition Members have obviously not thought of that. If 10 or 15 farmers near a market town had a large lump sum with which to buy store cattle or sheep, prices would rise dramatically. That would not benefit the buyer or, in the longer term, the seller. My hon. Friend the Minister is right to phase the payments so that the money is fed in gradually.
I am not a tax expert, but I believe that, over a five-year period, there will probably not be any tax deductions on the compensation. I am happy to be corrected on that. The money should be phased in, or there will be terrible distortion for everyone.

Mr. Penhaligon: I always give the most careful consideration to arguments advanced by the hon. Member for Torridge and Devon, West (Sir P. Mills). I wonder, however, whether farmers in his area all agree with what he said about a sudden injection of money. I have not addressed a meeting of farmers who, given the choice between money today and money tomorrow, think that they will be better off if they get the money tomorrow. Substantial sums of money will be released anyway because many cattle will be sold. In either case, I suspect that a good proportion of the money will go to the bank.
The best solution is to enable farmers to choose. Many farmers in my area are interested in the scheme, not because they want to restructure their holdings but because they are under some pressure from bank managers as the dairy industry is suffering cash flow problems, not least because of interest rates.
My experience of farmers is that they are sensible people who make rational decisions. The flexibility for which I am arguing would therefore be advantageous. I am sure that the Minister would not have much difficulty in persuading another place that such provision should be made.
The best solution is a choice, the second best is a lump sum and the third best is instalments. The lump sum would be better, not least because, despite what the hon. Member for Torridge and Devon West (Sir P. Mills) says, a considerable amount of the money will not go straight back into the market to buy sheep or whatever, but to the local bank manager to keep him quiet. The hon. Gentleman represents an agricultural seat and will know that a great deal of pressure is being placed on many farmers about their present cash flow position.

Sir Peter Mills: I thank the hon. Gentleman for his kind remarks. However, if that is the attitude of local bank managers, the matter is serious, because farmers who are leaving milk production will not be able to start production in another area. I hope that bank managers, or at least their


agricultural advisers at the main banks who read Hansard, will assist farmers to change their production and not to follow the road suggested by the hon. Gentleman.

Mr. Penhaligon: The implication of the hon. Gentleman's remarks surprises me. He is suggesting that he is not aware of the current pressure from banks on farmers. I know of it because my farmers tell me about it when I meet them. It is an extremely serious matter. My hon. Friend the Member for Ceredigion and Pembroke, North (Mr. Howells) is looking for an opportunity to draw some cases to the attention of the House.
My point is that such schemes work best with the maximum flexibility possible. Flexibility on this point would be advantageous to the dairy community, even if there was a fiscal adjustment in the capital sum to prevent taking it as a lump sum from being an obvious financial gain. Flexibility would assist some farmers who find themselves in difficulties when making sensible and rational decisions relative to their positions.

Mr. MacGregor: The hon. Member for East Lothian (Mr. Home Robertson) tabled the amendments on two false bases, as I understood his opening remarks. First, he said that they would apply to the existing and future schemes. I must disabuse him of that notion. As the amendments are drafted, they could apply only to future schemes, as the existing scheme is non-statutory. Secondly, if I heard him correctly — I am not sure that this is what he meant — he said that he sought to give the possibility of a lump sum, presumably for future schemes, although obviously he was talking about the existing one. His amendments would provide exactly the opposite. They would remove the possibility of flexibility, which already exists in the clause. He seeks to remove "may" and to insert "shall". Therefore, he would do the opposite of what the hon. Member for Truro (Mr. Penhaligon) advocates, that is, to keep flexibility for future schemes, if there ever are any. The Bill as drafted does precisely that. It gives the possibility of either a lump sum payment scheme or instalments.

Mr. Paddy Ashdown: My hon. Friend the Member for Truro (Mr. Penhaligon) said that flexibility should be in the hands not of the Minister but of the farmer. If the Minister admires and would like to encourage flexibility in the scheme, will he assure the House that that flexibility will be in the hands of the farmer, who can choose between the two when the scheme is in operation?

Mr. MacGregor: The existing non-statutory scheme is already in operation, and we have debated it on many occasions. The Bill gives further statutory authorisation for future payments under the existing scheme. At present we are using the appropriation procedure, but the sums are so large that it is not appropriate for all the payments under the existing scheme. If there is a scheme in future, the Bill as drafted will not pre-empt choice in the way that the hon. Gentleman's amendment would do.
The amendment is unwise for three reasons. First, it would tie the hands of any future Government to an unreasonable extent, because such a Government would have to be able—I repeat "would have to be able"—to find the money for the scheme in one financial year. In

practice, that would mean either that the total amount available might be less than it would otherwise be—the hon. Gentleman said that it would have to be paid in one financial year rather than over a period—or it might act as a great disincentive to a future Government to introduce a similar scheme. If we accepted the amendment, we should be binding the hands of a future Government to one method that may be inappropriate in the financial year in question. The clause as drafted gives a future Government the option to introduce a lump sum scheme, or a scheme spread over a period, as with the present scheme. It is right to retain that flexibility. After all, that is what the hon. Gentleman sought to achieve with his amendment that I accepted in Committee.
Secondly, the amendment would mean that when a producer was assessed for tax the full payment in the first year would be treated either as income for the whole of the first year or, if we follow the present tax arrangements, as capital gains tax. That would lock many producers into a much less favourable choice than they have under the existing scheme, where, if they choose the income tax option, they can spread their income assessments, and hence their tax bills, over five years. The hon. Gentleman's proposal could lead to an increased income tax liability compared with the present arrangement. That would prevent the use of the flexible and favourable tax arrangements in the present scheme.
The hon. Member for East Lothian commented on the income position of producers who take up the scheme. He ignored the considerable cash sum that can come from the sale of the herd and the consequent tax advantages. The Finance Act 1984 extends the possibility of choosing that option. If farmers choose that option, the proceeds of the sale are tax-free.
Thirdly, the amendment is unwise because of the effect on the markets to which my hon. Friend the Member for Torridge and Devon, West (Sir P. Mills) referred. It is significant to note that the schemes which are often quoted in debates about outgoers — the French and German schemes—also phase out the payments. I am sure that those Governments had in mind the point that the Government and my hon. Friend the Member for Torridge and Devon, West make.
For all those reasons, I cannot commend the amendments to the House.

Mr. Home Robertson: I take the Minister's point about the drafting of the amendment. We made the rash assumption that the Government intended to introduce a scheme under the statutory provision which they are bringing forward. In tabling the amendment, we intended to provide that lump sums only should be made available. If the purpose of the scheme is to provide sufficient funds to farmers to enable them to restructure their businesses, they would need lump sums to cover the capital costs of new stock and machinery — [Interruption.] The hon. Member for Torridge and Devon, West (Sir P. Mills) can shake his head and say that farmers can sell their cows, but he knows as well as I do that, in many cases, the dairy units about which we are talking are mortgaged up to the hilt. Therefore, the sale of the cows will go to pay off existing debts and will leave little, if anything, to pay for new stock or machinery.
The Minister made great play of the fact that he did not wish to tie the hands of an incoming Government. I can say only that the present Chancellor of the Exchequer will


not be Chancellor for ever; indeed, the way he is going, he might not be the Chancellor of the Exchequer for much longer. There is nothing to demonstrate that we will be hampered for ever with the kind of prejudices with which we are stuck at present.
12.30 am
I was interested in what the hon. Member for Torridge and Devon, West said. He gave an interesting insight into the conduct of agricultural marketing in the west country. He seemed to be admitting that profiteering was likely to take place on a massive scale. I do not know about farmers in Devon. I can tell him from my own experience of observing people in the farming industry buy and sell stock that in my part of the world it is difficult to profiteer when dealing with hard-nosed farmers. I did not find his argument very convincing.
The Minister and the hon. Member for Torridge and Devon, West have let the cat out of the bag. These funds are not intended to provide sufficient capital sums to allow units to redevelop and recreate new employment to replace the jobs lost in the rural areas. This is a glorified agricultural supplementary benefit scheme. A relatively mean pension is being offered in an attempt to pay these people. Frankly, I am not impressed by the arguments that have been advanced from the Government Benches.

Amendment negatived.

Mr. John: I beg to move amendment No. 6, in page 1, line 17, at end insert—
`(4) A scheme under this section shall make provision for the surrender of a tenant farmer's milk quota without the necessity for the consent of his landlord to be obtained.'.
I suspect that the Minister will take the point that he took on the previous amendment, namely, that it refers to a future scheme. My response is that it is the only mechanism by which we can secure discussion of the arguments and problems which will have arisen under the present scheme and which will arise under any future scheme causing a considerable amount of hardship and vexation. This hardship will occur because of the crucial decision to attach the quotas to land rather than to a person.
This central decision has led to the necessity for a landlord to express his consent and, according to the farming press, to a number of disagreeable occurrences. At such a time the tenant is faced with a maximum period of pressure. After all, he will have decided to get out of an industry to which he may have devoted his life. In such a situation, the landlord sometimes — and this has happened regrettably in a minority of cases — seeks to attach conditions, one of which is that there should be an increase in rent. In the farming press one case was reported in which a condition was made not only that the rent shall be increased but that the period for which the rent obtained should be shorter then the legal minimum of three years. That takes advantage of a situation created, to put it neutrally, through no fault of the tenant farmer, and attempts to turn matters to the advantage of the landlord. In a third case described in the farming press, the landlord had invested very little in the original dairy undertaking. These cases evidence what has happened.
Need this happen? In Scotland there is no such condition for a landlord to give his consent. I cannot understand why the tenant in Scotland is so much more trustworthy or why the tenant in England and Wales is so much less trustworthy. The Scots system — although I would not want my hon. Friend the Member for East

Lothian (Mr. Home Robertson) to take this as a precedent — is far superior to the system currently obtaining in England and Wales.
There is an argument for saying that the types of tenure should be treated separately, attaching conditions to the land in the case of an owner-occupier or to the person in the case of a tenant.
The amendment makes it obligatory on the Secretary of State to make provision for such surrender but does not specify the manner in which to leave the maximum flexibility. One way in which this could be done is for the tenant to be asked to notify the landlord of any application to take advantage of the outgoers scheme and to give the landlord the opportunity to make representations to the Ministry when it was considering whether the tenant's tenant should be allowed to take advantage of the outgoers scheme. That makes the opportunity for pressure to be applied directly by landlord on tenant far less. It is a more indirect process. Therefore, the leverage is less hard on the tenant.
We have heard of hard cases under the present scheme. We do not want them to be repeated. We hope that the Minister will take account of the representations and try to devise a scheme, by accepting the amendment, in which the landlord is not compelled to give his consent, but some other safeguard for his just and natural interest is devised.

Mr. MacGregor: I recognise what the hon. Member for Pontypridd (Mr. John) is trying to do. We have had long debates in the House about the position of tenants in relation to the outgoers scheme. I recognise that some tenants have not been able to obtain their landlord's consent to their becoming outgoers.
As the House knows, when drawing up the existing non-statutory scheme — the non-statutory element is important—we tried hard to get both sides, landlord and tenant, to agree on procedures giving tenants more freedom of action. However, that agreement was not forthcoming in England and Wales. As a result, we felt that we had no choice but to require the landlord's consent in all cases.
It might be helpful if I explained the significance of my remark about the scheme being non-statutory. Since the agreement was not forthcoming, there would have been legal risks if we had not insisted on landlord's consent, as well as some problems of equity. Obviously, the problems of equity relate to cases where the landlord has made a considerable investment. However, there were also legal problems which we had to face. If a tenant joined the outgoers scheme and surrendered his quota without the landlord's consent, it might be possible, depending on the terms of his lease, for his landlord to sue him for breach of contract. Moreover, the landlord might be able to claim that the Minister had incited the tenant to break his contract because the scheme is based on a contract between the Minister and the producer, and is therefore based on contract law and not on statute.
One of the reasons why we introduced a non-statutory scheme, and one of the advantages of doing it in this way, was that it enabled us to get the scheme off the ground more quickly, and we are a long way down the road of completing the outgoers scheme this year. This will enable us to reallocate the quota much earlier. I am sure the House will agree that that is an advantage. Considerable legal and other problems were involved, and in the end we could not do as the hon. Member for Pontypridd urged us to do.
In many respects it was unfortunate that we could not get the agreement, but in practice tenants account for a significant proportion of outgoers. I pay tribute to the president of the Country Landowners Association, who has genuinely urged his members to listen carefully to every tenant who wishes to take advantage of the outgoers scheme and be as forthcoming as possible. We are seeing the evidence of that in practice.
The hon. Member for East Lothian (Mr. Home Robertson) referred to Scotland, where the legal system is different.

Mr. Home Robertson: Thank God for that.

Mr. MacGregor: Not always. Also, the procedures that allow some tenants to become outgoers without necessarily obtaining their landlord's consent are fairly limited there. They are limited to situations in which there is no reference to dairying in the lease, and also to situations in which the landlord provides no facilities. There are one or two other details, but those are the two crucial ones. Although the scheme has operated in a slightly different way in Scotland, it is not carte blanche. It is fairly limited. The results are interesting to compare. Some 36 per cent. of payments made in Scotland so far have been to tenants, and about 30 per cent. of those who received payment as outgoers by 25 January in England and Wales were tenants. Therefore, there is not a great deal of difference. That demonstrates both that the urgings made by the president of the CLA have had an effect and that many landlords are trying to meet their tenants' wishes. Although we tried hard to get an agreement along the Scottish lines, in practice many tenants can take advantage of the outgoers scheme.
In England and Wales, of the 40 per cent. who initially expressed an interest in the outgoers scheme, 30 per cent. are getting payments. We know from the way that the outgoers scheme has operated that it is not just the fact that they cannot get the landlord's consent that has prevented some of the others from taking advantage of the scheme. It is also that, in many cases, as with owner-occupiers, when they are faced with a firm offer, they decide not to take it up. It is difficult to be exact, but a considerable number of tenants are taking advantage of the scheme.

Mr. Geraint Howells: I am interested in what the Minister has said, but I cannot understand why so many landlords in this country are willing for the tenants to go for the outgoers scheme. I am sure the Minister will agree that the property is worth much less once the quota has been taken away.

Mr. MacGregor: Obviously, it will vary. In each case people will be making voluntary choices, and they will look at their situation and make their decisions. The evidence is that so far 30 per cent. of the payments have gone to tenants.

Mr. Dafydd Wigley: I have been listening carefully to the figures which the Minister has quoted. They are interesting, but they do not substantiate his argument. The fact that 36 per cent. of farm tenants in Scotland and 30 per cent. in England and Wales have gone into the scheme must be related to the proportion of Scottish holdings which have tenants, in relation to the number in England and Wales. Even more important, we

do not know what proportion of the tenants in England and Wales may have wanted to go into the scheme but have not made an approach because they knew the attitude of the landlord. That is the critical thing, and, given what the hon. Member for Ceredigion and Pembroke, North (Mr. Howells) said a moment ago, the experience is that large numbers would like to go into the scheme but cannot do so for the reasons that I have set out.

Mr. MacGregor: We can go on endlessly debating this matter, but we do not have the precise market research that will give us the answer. I can tell the hon. Gentleman that 39 per cent. of the applicants for the outgoers scheme in Scotland were tenants, and 40 per cent. in England and Wales. The figures are not far different. Despite the fact that we have not been able to get an agreement, it is still the case that a considerable number of tenants have been able to take advantage of the outgoers scheme. Beyond that we are speculating, because we do not have the information to come to conclusions.

Mr. Penhaligon: The Minister has twice said that he tried to get agreement on the Scottish lines and failed. Who has the veto on this agreement?

Mr. MacGregor: If we were to get this through a non-statutory scheme — I have already referred to the legal difficulties — it was necessary to get an agreement to which both sides, the landlords and the tenants, were able to agree. We ran into difficulties and it was not possible to reach agreement because of the many legal complications that might arise. Nevertheless, it is worth re-emphasising that the president of the Country Landowners Association urged landlords to be as sympathetic as possible to tenants requests. That must have had some impact.
Having dealt with the position to date, I should now deal with the amendment. In moving the amendment, the hon. Member for Pontypridd spoke about the problem that the quotas are attached to the land. This connects with the point made by my hon. Friend the Member for Chichester (Mr. Nelson). At the moment the quotas are, in effect, attached to the land, and that is in the Community regulations. That was done for a variety of reasons, in particular because the Commission felt that that was the best way to make a scheme which was not open to anomilies and abuses in the various member states, and about which there would be more certainty of application.
12.45 am
In due course we shall be seeking to put more flexibility on this aspect into the quota system, but the first priority was to get the quota system applied, and to get on with the outgoers scheme and the allocation of quotas. The second priority was to get changes in mixed business. The third priority was to start discussing ideas of greater flexibility. I refer both hon. Gentlemen and my hon. Friend to the paper produced by my Department on the mobility of quotas, where all of these matters are discussed. It is will worth studying. In case there is an opportunity to discuss these matters in the Council of Ministers, we asked the industry to respond by the end of last month, and this it has done. We are assessing all the reactions that we have received to the ideas we put forward for introducing greater flexibility and greater transferability into the quota system. Some producers detach the quotas from the land.
Once we have made up our minds about what we wish to obtain, agreement has to be reached in Brussels. We


have to ensure that the Commission is interested in our proposals, and the Council of Ministers then has to agree them. A number of member states are still wedded to the idea of the quotas being attached to land. Therefore, I do not underestimate the difficulty of obtaining greater flexibility. However, it is clear from our paper that we should like there to be greater flexibility.
I referred earlier to the legal difficulties surrounding the existing scheme. I should make it clear to the House that the amendment would not remove the risk that, in certain circumstances, a landlord whose tenant surrendered the quota without consent might be able to take action against the tenant for breach of contract. The obligation of a tenant to a landlord is contractual. If a tenant surrendered the quota without the landlord's consent, he might be in breach of contract, though not necessarily. It depends upon the terms of the contract. The secondary legislation which could be involved if the Bill were used on a later occasion could not change contractual rights unless the enabling primary legislation says that it can. That is the problem about the amendment. I do not want to make too much of that point because I recognise the difficulties surrounding the drafting of amendments. However, I have to make the point that the risk could still be there.
The more important point in relation to the amendment is that it is worded in such a way that it would apply only to future statutory schemes, not to the existing scheme. If at anytime we were to introduce a new scheme — I repeat that we have no such plans — I hope that we should be able to make more satisfactory arrangements for tenants. The statutory nature of the scheme would make that easier, but the amendment is not necessary to enable us to do this. Even without the amendment, we should be able, if we were able to overcome the problems, to operate a statutory scheme which did not insist upon the landlord's consent. Therefore, I believe that the amendment is unnecessary and unsatisfactory for the reasons that I have given and I am afraid I cannot commend it to the House.

Mr. John: The Minister has unduly relied upon technicalities which I had already conceded. These amendments are vehicles for debating important subjects. The Minister has not dealt, except in the most general way, with the position as between landlord and tenant. The point I raised was that, having attached the quota to the land, the landlord's consent was necessary, although he has played no real part in building up the dairy industry upon that land. Therefore, I urged the Minister to ensure that a system would be adopted under which at best the landlord's legitimate concerns can be expressed only indirectly.
The fact that the legal advice, which the Minister has received has been fairly weightily placed in his brief will not, I hope, prevent him from looking at the very real problems that exist in a minority of cases under the present scheme. I hope he will make sure that they do not happen again, by ensuring that the part the landord has to play is more indirect than it is at the moment. The present system is far too direct.
In view of what the Minister has said about the inapposite nature of the amendment I shall not press it, but I hope that he will not forget its underlying sentiment. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Mr. Home Robertson: I beg to move amendment No. 7, in page 1, line 17, at end insert:

`(4) A scheme under this section shall fix the amount of surrendered quota to be accepted at such level as will enable milk producers making development claims to produce in full such secondary wholesale quotas as have been allocated to them'.
The purpose of the amendment is to extend the objective of the outgoers scheme in order to take account of the acknowledged needs of producers who have good reason to expand their production above their primary quota. That may not be only in the interests of the individual producers, but many feel that such expansion is in many instances in the interests of the dairy industry.
At present the Minister has said that his objective is relatively limited. He is seeking to buy in sufficient quota through the outgoers scheme in order to redistribute that quota to those smaller producers who want to try to stay in business in order to allow them to come back up to their 1983 production level. The Minister has said that he needs 289 million litres for that objective in England and Wales.
In reply to his hon. Friend the Member for Devon, North (Mr. Speller), on 28 January the Minister said that he could possibly obtain up to 400 million litres if he accepted all the applications under the outgoers scheme. We appreciate that by no means all of those options could be realised. It is likely that that some of those who expressed an interest might not want to go through with it. Nevertheless, that sort of figure could give the Minister sufficient quota to top up all the small producers and to release an additional 100 million litres of quota for producers with special needs.
That is on the basis of current offers under the present scheme which some hon. Members have described as cheap and nasty in the past, and I stick to that description. We are inviting the Minister to recognise the need to make more quota available for redistribution and to increase the scale and scope of the outgoers scheme accordingly, especially in line with the possibility which has now been opened up under the amendments moved by the Minister earlier for partial cessation of production under some future scheme.
It is worth looking briefly at the background to the situation. The Ministry has set up an empire of tribunals and committees to assess the special needs cases, including those who want to extend production. Those tribunals have reached their conclusion in Scotland and will soon publish their recommendation for England, Wales and Northern Ireland.
We know that the recommendations made by the tribunals in Scotland will have to be cut back by 42·5 per cent. Because there is not enough secondary quota available for redistribution. Those figures have been tallied up in Scotland. We do not yet know the story in England and Wales. The inspired rumours that we see in the farming press seem to show that for England and Wales the cutbacks could be as much as 35 per cent. and for Northern Ireland as much as 55 per cent.
That makes a farce of the rigmarole of trying to work out how much additional quota should be distributed to people with special needs. We have a system of quasi judicial tribunals, assessing need and having to observe extremely harsh criteria in doing so. They are going on to make recommendations of the rock-bottom needs of farmers in those special circumstances and then the Minister will only be able to allocate perhaps two thirds of those recommendations at the end of the day. All that performance and still there is no way of satisfying that proven need.
We for our part want the scheme to work. We want it to enable those who remain in dairying to thrive. We also want it to provide enough cash to enable those who come out of dairying to set up new enterprises on their farms and to sustain the local rural economy. The scope of the scheme is patently hopelessly inadequate. We urge the House to consider whether the amendment would make the scheme match up to the need.

Mr. Penhaligon: This is the key amendment. Unless the Minister makes a move, the farmers who have produced their accounts and books, have taken days off from the farm and travelled miles to the tribunals will be outraged. These farmers have worked and worried for months to find out whether they will receive extra quota, but after the great day arrives and they are given their quota, they will be told that there is not enough quota to go round.
This amendment would help the Government. I am sure that the Minister wants to help, if only he is given the opportunity. If we approved the amendment, he could go to the Chancellor and explain the enormous pressure and outrage amongst those who know about farming communities. He could then produce the few extra million pounds needed to square the circle. If the matter is not given serious attention, the whole quota scheme will come into disrepute.
Shortfall has been referred to. Scottish farmers give more substance to the case. Government Members representing Scottish constituencies have argued that the matter needs attention. Rumours suggest that there is a 30 per cent. shortfall. If that figure is not correct, we shall cease to worry, but I fear that it is correct.
We have an opportunity tonight to save a great deal of outrage and anger among local and national farmers' unions. Without the amendment, the final lunacy of quotas will arise. Quotas will be given, but they will be snatched away again. Farmers in Devon, Cornwall, East Anglia, mid-Wales and Scotland will not understand the logic of that, no matter how the Minister tries to explain it.

Sir Peter Mills: I was not planning to speak, but I feel that I must after what the hon. Member for Truro (Mr. Penhaligon) said. He is not being fair. On each of the quotas a warning was given. That must be said. Only a certain amount of cake — a certain total of quota — is available to be divided as fairly as possible among all the dairy producers. It is a difficult task, and I pay tribute to the panels and tribunals. They have conducted themselves to the best of their ability.
I have always said that a quota scheme can never be fair. It never will be fair. It is the wrong way. I am an end price man—and always have been.
Can we get an extension of the outgoers scheme? I want that, but where does the money come from? I am certain that we shall not get it from the Treasury. It was hard enough to get the £50 million out of the Treasury.
The farming community accepts that there should be more savings within the Minister of Agriculture's budget. This is the major problem in agriculture. It is more important than anything to provide more money for the outgoers' scheme.
Savings of between £7 million and £8 million within the Ministry of Agriculture, Fisheries and Food would be enough to make the position much happier. Alternatively,

another method, one which I favour, would be to persuade the Community to pay. It is important for the Minister to fight hard in Brussels to see if money can be obtained from that quarter for an extension of the outgoers scheme.
I agree with the hon. Member for Truro that there will be great disappointment when the final figures come out and farmers see the amount of quota that they will be allowed. Many dairy farms will not be viable, and the only answer is an extension of the outgoers scheme. Finding the money is the problem. I suggest either savings within the Department or more money from the Community.

1 am

Mr. Stephen Ross: I had not intended to speak, but the remarks of the hon. Member for Torridge and Devon, West (Sir P. Mills) drew me to my feet. The hon. Gentleman has visited my constituency and met members of my local NFU. If he comes again, he will have a chilly reception, following his comments tonight about the fairness of the tribunals.
The former president of the NFU called me to his house last Saturday and told me how he had suffered an outbreak of summer mastitis in 1981 and 1982. He took his case to a tribunal, before which, in 15 minutes, he got what he did not regard as natural justice. He is a member of the magistrates' bench in my constituency and is suffering —[Interruption.]
Conservative Members can giggle at that if they wish, but if one has an overdraft of £100,000 and bank managers at the front door, if one is losing quota and if one has no hope of making a living in the coming years, it is a serious matter. That state of affairs faces far too many farmers in my constituency and elsewhere. The system of appeal before tribunals has been grossly unfair and it should never have been allowed in the first place.

Mr. Ashdown: The hon. Member for Torridge and Devon, West (Sir P. Mills) says that there will be disappointment when it is known that the quota to be distributed may be 35 per cent. less than farmers now believe they have. If one speaks to the farmers in my constituency — I am sure that the same applies to farmers generally—one hears that they believe that the quota that they have received is the figure for the secondary quota.
My hon. Friend the Member for Truro (Mr. Penhaligon) is right to say that after the performance through which they have been — he described it as a quasi-judicial process, and that is what it is—there will be outrage. They had to produce facts and figures and present their cases in detail.
The Minister said that he had looked for a process that would produce a sense of justice, albeit — because the scheme had to be produced more quickly than he would have wished—a sense of rough justice. Many farmers in my constituency are complaining about the roughness of the justice. There is wide disparity between the decisions of the various tribunals. However, that will be nothing when the farmers realise that the quotas that they thought they had are no longer theirs.
It may be, as the hon. Member for Torridge and Devon, West said, that we have been forced into a position which produces that unhappy result. Perhaps, as he suggested, the Minister will be able to get some more money from Brussels. He will not get any from the Treasury, that is for certain.
But that is not what we are discussing. The Bill is related not to the current situation but to what we shall be producing in four or five years' time.
Thus, the measure is concerned with a system which, because of the time factor, we should be able to get it right. Surely we do not want to perpetuate the present injustices. Surely we want to construct a scheme in which the quota which is surrendered matches the quota which is dished out. If we cannot provide justice now, we should be constructing a scheme that will provide it in future. I saw the Minister nod. Surely he must want that element of stability and justice. I do not understand why he feels that he must reject a system that is fairer than the one in the Bill.

Mr. MacGregor: I shall explain again to the hon. Member for Yeovil (Mr. Ashdown) what we are talking about. We are discussing the provision of more permanent statutory approval for future payments under the existing scheme. Secondly, we are taking the opportunity to give proper statutory backing, if ever there should be a further scheme, although I have made it clear that we have no intention of introducing a further scheme. The amendment applies to future schemes.
There is a dilemma and a problem over secondary quotas. It is important to start with the understanding that both base year revision claimants and expanders are involved. The provision for their secondary quota comes from the reserve for special cases which we created when we gave a primary quota to everyone of 9 per cent. As the national cut was just over 6·1 per cent., there was a reserve of just over 2·9 per cent. The reserve is being used for base year revision claimants and expanders. I am talking about wholesale producers and not direct sellers. The provision will not come from the quota that we are taking in under the outgoers' scheme because we are using that to help small producers and exceptional hardship cases. It is the special reserve that enables us to meet the special cases.
There are many producers who have expanded considerably since 1981 and they have caused the national cut to be 6·1 per cent. There are also many producers who have heeded the warnings about excess dairy production in the Community for many years and restrained their production. Many measures, which proved ineffective, were taken over the years to try to restrain milk production, and the producers who have shown restraint do not see why their production should be cut even more to make provision for the expanders. It is a difficult balance to strike, but I believe that we have managed to do so. That is the way in which we are dealing with the development cases this year.

Mr. Geraint Howells: Can the Minister explain why so many dairy producers expanded their production between 1981 and 1983? The answer is Government policies to produce more and more milk.

Mr. MacGregor: Many producers took advantage of the various developments, the main ones being Community schemes, during that period. They did so in the knowledge that we were producing a surplus of milk production in the Community of substantial proportions, the cost of disposing of which was getting greater year by year. I have talked to many producers who have said, "We could see that there would have to be further restraining measures and so we did not increase our production." We

had to pay heed to the problems of those producers as well as the others. It is in that way that I think that we struck the right balance.
We have made every effort to enable the panels and the tribunal to implement the process that has been established. I hope that the tribunal will soon—certainly before the end of the month — have finished its work. We shall then be in a position to tell the producers who have had provisional allocations from the tribunals what the final allocation is.

Mr. Andy Stewart: Will my hon. Friend give way?

Mr. MacGregor: I know that hon. Members are anxious to proceed. I just want to develop this point. We have made it clear from the outset of the secondary quota process—as a number of my hon. Friends including my hon. Friend the Member for Torridge and Devon, West (Sir P. Mills) have said—that, if there were not enough quota available at the end of the day for all the allocations that the panels and tribunals gave, we would have to scale them down. We have never pretended about that and have made it clear from the start that it was probable that the scaling down would be substantial.

Mr. Stewart: I am sorry to intervene. I did not catch Mr. Deputy Speaker's eye. We have heard about how the panels arrived at their decisions. What profession made up the panels?

Mr. MacGregor: We endeavoured to have on the panels people with a wide range of experience. The panels included a considerable number of people who had been dairy producers, solicitors, land agents and accountants — a range of people who had the expertise and judgment combined between them to make the decisions based on the case made by the applicants. That operation had to be conducted quickly because we were anxious for every producer to know as quickly as possible where he stood. A splendid job was done by my Department in finding the people for the panels. It was not an easy task to increase the number of tribunal members from 12 to 90 over the Christmas period and expect them to work full time. We did as well as could be expected in obtaining that range of experience.
We have never made any secret of the fact that there will be a scaling down. In England and Wales that will depend on the final allocations by the tribunal for secondary quota — they are not all in yet — and on the final figures from the Milk Marketing Board. We are dependent on the board to ascertain what it has allocated for primary quota. It looks as though the scaling down will be at least 35 per cent. We have previously made it clear that that would be the case. We do not yet have the final figures from the Milk Marketing Board or the tribunals to enable us to be absolutely firm. We hope to be firm as quickly as possible.
A number of hon. Members have made the point that they want extra funding for the existing scheme, and that was the theme on Second Reading. I repeat what my right hon. Friend the Minister said to the House on 10 January. Given the Government's desire to reduce Government expenditure and the fact that there is substantial support for the dairy sector in other ways through the common agricultural policy, we can give no promise of an extension of the existing scheme.
Obviously, in a future scheme it will be open to any Government to cover any milk matter in whatever way they wish and with whatever funds they feel that they can make available. Therefore, it will be up to any Government, if they wish to consider a future scheme, to decide the amount of the funds available as well as the methods — a lump sum or payment over a period of years. There probably will not be development claims or secondary quotas in any future scheme, because the secondary quota process will be finished by the end of the month. It is a mistake, therefore, to tie down any future scheme in this way. It inhibits flexibility and is unnecessary. Therefore, again, I cannot commend the amendment to the House.

Mr. Home Robertson: The Minister does not have a terribly good story to tell, and I think he knows it. There is a serious shortage of quota for redistribution to people with urgent needs. That point has been made abundantly clear by hon. Members from both sides of the House.
The hon. Member for Torridge and Devon, West (Sir P. Mills) was a lone voice coming to the support of the Minister. He said that the people had had a warning and should have known that scaling down would be necessary. That is not much help to those who are involved and who are trying to keep their businesses alive. They cannot milk warnings, although I suspect that the Minister and his hon. Friend the Member for Torridge and Devon, West were trying to do that this evening.
1.15 am
The Minister said that the people who were expanding their herds until the last minute should have known that there was trouble on the horizon. He cannot have it both ways. Right up to the eve of the sell-out by the Minister of Agriculture, Fisheries and Food last March, I think, his Department was paying incentives to people to expand. The Minister is saying that people should have seen the smoke signals. The danger signals were there right enough but within weeks of introducing the quota system the Minister's Department was paying cash grants to people to expand their herds and invest in new equipment.
The story is not a happy one for the Government, and it is disastrous for many dairy farmers. They are faced with a "Catch-22" situation. When the quota system was introduced it was dressed up and it was to be as fair as possible. That is right. The Minister set up the tribunals and all concerned went along to present their cases. The House might have gained the impression from that that it was intended to satisfy proven need. That is not so. We have heard the figures. The scale-down from the proven need as assessed by the tribunals in Scotland is 42·5 per cent. The Minister has now admitted that it will be at least 35 per cent. in England and Wales. We understand that the figure could be substantially higher in Northern Ireland.
There is a way to obtain additional quota to satisfy that need. [HON. MEMBERS: "How?"] Through the outgoers scheme. That is what we are debating. It would be necessary to expand the scheme to buy in sufficient quota from people who are willing to leave or partially reduce their dairy herd, as will be possible through the new scheme under the amendments which the Minister has moved. That is how additional quota could be made available to try to introduce some fairness into the shambles which the Minister has managed to create.
We need an expanded outgoers scheme. If there was an ounce of fairness in the Minister he would accept the spirit of the amendment.

Question put, That the amendment be made:-

The House divided: Ayes 30, Noes 117.

Division No. 92]
[1.17 am


AYES


Alton, David
McKay, Allen (Penistone)


Ashdown, Paddy
Maginnis, Ken


Banks, Tony (Newham NW)
Maxton, John


Boyes, Roland
Nellist, David


Bruce, Malcolm
Nicholson, J.


Clark, Dr David (S Shields)
Parry, Robert


Cook, Frank (Stockton North)
Penhaligon, David


Davies, Ronald (Caerphilly)
Pike, Peter


Fatchett, Derek
Ross, Stephen (Isle of Wight)


Foulkes, George
Steel, Rt Hon David


Harrison, Rt Hon Walter
Taylor, Rt Hon John David


Home Robertson, John
Wigley, Dafydd


Howells, Geraint
Winnick, David


Hughes, Simon (Southwark)



John, Brynmor
Tellers for the Ayes:


Kennedy, Charles
Mr. Alan Beith and


Lloyd, Tony (Stretford)
Mr. Michael Meadowcroft.


NOES


Amess, David
Lord, Michael


Ancram, Michael
Macfarlane, Neil


Ashby, David
MacGregor, John


Baker, Nicholas (N Dorset)
Maclean, David John


Beaumont-Dark, Anthony
Major, John


Bellingham, Henry
Malins, Humfrey


Bevan, David Gilroy

Marland, Paul


Biggs-Davison, Sir John
Mather, Carol


Bottomley, Peter
Mayhew, Sir Patrick


Bottomley, Mrs Virginia
Merchant, Piers


Bowden, Gerald (Dulwich)
Meyer, Sir Anthony


Brandon-Bravo, Martin
Miller, Hal (B'grove)


Bright, Graham
Mills, Iain (Meriden)


Brinton, Tim
Mills, Sir Peter (West Devon)


Brooke, Hon Peter
Moate, Roger


Bruinvels, Peter
Morris, M. (N'hampton, S)


Buck, Sir Antony
Moynihan, Hon C.


Budgen, Nick
Murphy, Christopher


Burt, Alistair
Nelson, Anthony


Cash, William
Neubert, Michael


Chapman, Sydney
Nicholls, Patrick


Chope, Christopher
Norris, Steven


Clarke, Rt Hon K. (Rushcliffe)
Page, Sir John (Harrow W)


Colvin, Michael
Page, Richard (Herts SW)


Coombs, Simon
Pawsey, James


Cope, John
Portillo, Michael


Couchman, James
Rhys Williams, Sir Brandon


Dorrell, Stephen
Roberts, Wyn (Conwy)


Dover, Den
Roe, Mrs Marion


Dunn, Robert
Rowe, Andrew


Durant, Tony
Sackville, Hon Thomas


Edwards, Rt Hon N. (P'broke)
Sainsbury, Hon Timothy


Fallon, Michael
Shepherd, Colin (Hereford)


Favell, Anthony
Skeet, T. H. H.


Finsberg, Sir Geoffrey
Smith, Tim (Beaconsfield)


Gale, Roger
Soames, Hon Nicholas


Garel-Jones, Tristan
Speed, Keith


Gregory, Conal
Spencer, Derek


Gummer, John Selwyn
Spicer, Jim (W Dorset)


Harris, David
Stanbrook, Ivor


Hawkins, C. (High Peak)
Stern, Michael


Hayes, J.
Stevens, Lewis (Nuneaton)


Hind, Kenneth
Stewart, Andrew (Sherwood)


Holt, Richard
Stradling Thomas, J.


Key, Robert
Sumberg, David


King, Roger (B'ham N'field)
Taylor, John (Solihull)


Lawler, Geoffrey
Terlezki, Stefan


Lennox-Boyd, Hon Mark
Thomas, Rt Hon Peter


Lightbown, David
Thompson, Patrick (N'ich N)


Lilley, Peter
Thorne, Neil (Ilford S)


Lloyd, Peter, (Fareham)
Thurnham, Peter






Tracey, Richard
Wilkinson, John


Trippier, David
Wolfson, Mark


Twinn, Dr Ian
Wood, Timothy


Waddington, David
Yeo, Tim


Wardle, C. (Bexhill)
Young, Sir George (Acton)


Watts, John



Wells, Bowen (Hertford)
Tellers for the Noes:


Wheeler, John
Mr. Ian Lang and


Whitfield, John
Mr. Archie Hamilton.


Whitney, Raymond

Question accordingly negatived.

Title

Amendment made: No. 10, in line 5, after 'discontinuing', insert 'or reducing'. — [Mr. MacGregor.]

Motion made, and Question proposed, That the Bill be now read the Third time.—[Mr. MacGregor.]

Mr. David Steel: It is extremely late, and I shall not detain the House for long. I do not normally speak on agricultural matters for the very good reason that my party is full of experts on agriculture. They have made several notable speeches today, especially my hon. Friend the Member for Ceredigion and Pembroke, North (Mr. Howells), who discussed the administration of milk quotas.
The Government should count themselves lucky that such a small proportion of right hon. and hon. Members represent agricultural constituencies and that even fewer members of the public understand what has gone on in the milk quota system. If it had happened in any other suject that was understood by the urban electorate, there would have been a real sense of outrage, considering that in recent years taxpayers' money, not just Government exhortation, was put into schemes to expand milk production, some of which I have seen in my constituency recently. A few years later, we are putting more taxpayers' money into schemes to stop people producing extra milk. That is an Alice-in-Wonderland position. The first moral, which the Minister will acknowledge, is that there must be longer-term planning at European and domestic levels of the production of agricultural commodities.
Secondly, although the Bill is designed to bring relief to the smaller herds, the smallish herds on single-purpose farms will be most hit by the quota scheme. The larger farms with varied production can divert some production and acreage from dairying to other disciplines. That is not the case with farms, such as the one I visited in my constituency, with between 50 and 100 cows, which are a single-purpose unit. It is impossible for them to diversify into another form of production. The hardship of the milk quota system has fallen disproportionately on smaller farmers. The scheme should have been changed so that those with large lush acreages had more taken from them and a greater opportunity to diversify into other forms of agriculture.
Thirdly, the House should be extremely worried about the tribunal or panel system, which has been erected to cope with the difficulties that have arisen. In our political system it is normal that with tribunals, there is either a system of appeal or ministerial override and responsibility in the House. In this case there is neither. Once a tribunal has made a decision, the decision is not open to discussion with the applicant, his Member of Parliament, his

accountants or legal advisers, nor is the Minister responsible in the House for it. That cannot be healthy for our democratic system. The Government came into office dedicated to abolishing quangos. Yet they have set up a new system of quangos, which are entirely unanswerable.
The Government have a sorry record. I do not blame the Minister for that, because he is relatively new to the Department. During the past five years the Government's record does not bear close examination. In agricultural constituencies throughout the land there is a genuine sense of outrage at the way in which they have been treated.

Mr. Wigley: I shall speak briefly on Third Reading because of the significant effect of the dairy saga in Wales. In Gwynedd, especially in Dyfed—

Mr. Deputy Speaker (Mr. Harold Walker): Order. I hope that the hon. Gentleman will address himself not to that point but to the Bill. This is not Second Reading, but Third Reading.

Mr. Wigley: As I said, I am addressing myself to Third Reading because of the significant effect that the saga has had on Gwynedd and Dyfed, and the fact that the Bill does nothing to alleviate that, as it was intended to do.
Earlier we heard of the great likelihood of an insufficiency of resources to meet the needs and to safeguard the interests of dairy farmers. In Scotland more than 40 per cent. of the expected additional quota is being cut, and in Wales and England a cut of 35 per cent. is likely. There is no provision for financial compensation for that shortfall from what has been shown to be the necessary level of additional quota to make farms viable.
In my area, many farmers have waited for weeks to discover the results of those tribunals. They do not know where they stand, and now there is the additional uncertainty that, even if they receive an additional quota from the tribunal, it may not be granted to them. The farmers in my area want the Secretary of State for Wales and the Minister for Agriculture, Fisheries and Food to go to Brussels and insist that additional quota is made available to Wales, because there is no provision in Wales for alternative farming. The land and the climate do not allow it—

Mr. Deputy Speaker: Order. On Third Reading, hon. Members must address themselves to what is in the Bill. This is not a Second Reading debate. I hope that the hon. Gentleman will address himself to what is in the Bill.

Mr. Wigley: The Bill's failing is that it does not make the necessary provision to meet the problems of my constituents. It was put forward on Report as though it were doing so. It is not. That is why the House divided a few moments ago, and that is why there is great consternation, sometimes leading to riots, as we saw in south and west Wales in recent months.
This subject should not be treated lightly, even at this late hour. It is a matter of great concern to hundreds of producers in Wales, and that is why the Opposition are not satisfied with the Government's proposals. We expect further steps to be taken; at the very least, Ministers should return to Brussels to ask for more quota. In those circumstances, we should reject this inadequate Bill.

Mr. Geraint Howells: After visiting dairy farmers in the county of Dyfed in west Wales over the weekend to


discuss the outgoers Bill, I was dismayed by the apparent irregularities and anomalies that are being revealed by the quota allocations. I deplore the devastation caused to the dairy industry by the Government's policy of the imposition of milk quotas without thought, consultation or foresight.
Hon. Members on both sides of the House have mentioned relevant and important matters during our debates on the Bill. Many farmers who bought their farms in 1983 are in dire trouble, and I am worried that the Bill does not cater for the needs of farmers who bought their farms then. Yesterday, I had the privilege to visit a dairy fanner who had moved from Yorkshire to Pembrokeshire. I am sure that the Minister will not deny a Yorkshireman a living in Wales. He was determined to buy a farm just outside Fishguard, so he came down from Yorkshire and had a word with the local bank manager, who said that he would not allow him — [Interruption.] I am trying to make a case for the people for whom I feel sorry. If the Government do not do something in the near future, many of those who bought their farms in 1983 will go bankrupt.
I visited that farm and met the Yorkshireman, who is aged about 30, and is married with two children. They were crying. When I saw the child turning to its mother—[Interruption.] If hon. Members do not believe what I am saying, the name of the person concerned is a—

Mr. Deputy Speaker: Order. I do not question what the hon. Gentleman is saying, but I hope that what he discussed with his constituent relates to the Third Reading of this Bill.

Mr. Howells: With respect, Mr. Deputy Speaker—I am sure that many Conservative Members respect my views — I feel sorry for the young men who will go bankrupt within the next few years through no fault of their own. They were the unfortunate ones who took heed of Government advice to expand and to produce more milk. They moved from one farm to another. The farmer who moved from Yorkshire invested over £300,000 in his farm in Fishguard, and unless he has a substantial quota he will not survive. However, it is more than likely that he will not get it. The net result is that he and his family will have to sell up. The stock that he brought with him from Yorkshire, which is worth about £65,000, will have to go, he will become bankrupt and he will move back north.
There is no point in saying to those two or three farmers who have moved into Wales and to the local people who bought farms in 1983 that there is nothing in the Bill to cover for their needs. If the Minister and other hon. Members do not believe that this serious situation exists in west Wales, I invite the Minister to come and see for himself, with the Secretary of State. He will not need police protection this time, there will be no demonstration, and I assure him that he will be able to talk to these families and discuss the problems that will arise in the future. Next year it will be too late. The farms will have been sold and many of these people will have become bankrupt.
I hope that the Minister at this late hour will do something tonight about these people who are worried about what will happen tomorrow morning. Many dairy farmers have to go to the bank every fortnight to explain how they stand financially. It is a great shame that the Government have introduced such a Bill, because it is

causing a great deal of concern to those living in west Wales. I am sure that the day will come when the Minister will regret ever having introduced the quota system in Britain.

Mr. John: An apt summary of the Bill at the end of our consideration of it is that it makes the worst of a bad job. It is not the Bill that has created the undoubted hardship and suffering about which Opposition Members have spoken. It is the agreement of the Minister of Agriculture, Fisheries and Food to the quota system on milk which has caused the problem. The hardship would continue even if the Bill were defeated, and might well be exacerbated.
The scheme, which is partly legitimised by the Bill, is regarded now on all sides as a bungled job. Indeed, the Ministry itself recognises this in at least two respects with regard to the future. First, by the amendments that have been moved, the Ministry has recognised that a mistake was made in not including a scheme for partial surrender of milk quotas as well as whole surrender. It has laid down the statutory framework to do this in future. Secondly, by statement the Ministry has resolutely set its face against the repetition of the quota system in the restriction of cereal production. We have it on the authority of the Minister of Agriculture, Fisheries and Food that he will rely on the price mechanism rather than on what is enshrined in the Bill.
The reason why I go further and say that the Bill makes the worst of a bad job, granted that the initial agreement at Brussels was a very bad job, is that the decision is a national one. The scheme enshrined in clause 1(1) is a national decision and not a Community one. The hon. Member for Torridge and Devon, West (Sir P. Mills) conceded that the scheme arose from a national decision. It is this provision of the Bill which has restricted the payment of £50 million over the five years of the scheme. On Second Reading and in the debate tonight, it would have been simpler and more straightforward if the Government had taken the opportunity given by the Bill and by the quota system to realign the dairy industry in accordance with modern requirements as they are now revealed. The Bill fails to do so from the point of view of the outgoers because it gives them no lead or direction on whether the Government want them to remain in or go out of dairying, or, if they want them to remain in farming, what other form of occupation in farming and agriculture they want them to carry on.
Because the Government have not accepted amendment No. 7 on the surrender of quota, many of those who remain in dairying will not have adequate quota to make their holdings viable, whereas the aim of a Government faced with a surplus of dairy products is to ensure that those who remain in dairying have adequate quotas whereby they can carry on viable businesses and purchase sufficient supplies to service those quotas. We have heard about the apeal that led to cutbacks done on the basis of the milk available rather than need.
Those are the reasons why the Bill does not settle either the shape or the form of farming. Many of those who remain in farming will do so not because of the golden future that they see, but because—I believe that this is what the hon. Member for Ceredigion and Pembroke, North (Mr. Howells) was saying—they cannot afford to get out of the system in which they are now trapped.
There are many examples of debts, to which clause 1(1) does not address itself. Mention has been made of Dyfed, and of overdrafts of £250,000 and, indeed, of over £1 million because of expansion. Perhaps the warning signs were there, but they were masked by Government encouragement for expansion. As a result, many people have got into alarming debts. The Bill has little or nothing to say to those people. It has nothing to say about the destruction of their life's work.
The scheme is described as an outgoers scheme. In fact, the Bill does not deal with all those who are going out. We have had this argument before, and I do not propose to rehearse it at length. I hope that the House will remember that people who are employed withing the dairy industry—directly in dairying, in transport, feed production and so on — will be made redundant as a result of the scheme. In particular, the most immediate and direct effect will be on employment in the creameries.
That is why I say that the Bill gives backing to a scheme that is inadequate, and miserably so. It was agreed in haste in Brussels. The Minister went out there saying that he was not prepared to agree to a quota system, and came back trying to sell it to the House. It is a monument to the failure of the Ministry. It talked about farmers not heeding the warning of recent years, but it has not heeded the warning of recent years. It has been a Mr. Magoo style of politics in which the Ministry of Agriculture, Fisheries and Food went on believing that its will would prevail over that of its partners until it bumped into reality at Brussels and had to adopt a system that it freely confessed in its response to the Select Committee it still did not like and want.
Because the anxiety is so keen, as hon. Members have said, in the agricultural areas, because the uncertainties felt by dairy farmers are still so great, many of whom have claims still in the pipeline, and because of the hardship that they have faced and do face, I believe that there is a duty on the House tonight not to add to that uncertainty unless what is before it s totally repugnant. The scheme is certainly inadequate. It is certainly puny, too, but no one can gainsay that the principle of compensating those who are forced to go out of milk production by a Government scheme is correct.
While we have the gravest reservation about the adequacy of the scheme and we believe that another, better scheme will have to be devised when the results of this one become known, we would be wrong to take away from the producers who are still awaiting adjudication of their claims to go out from the dairy industry the protection of clause 1(1). The quotas will remain whether or not the Bill is passed. We would take away the ability of the Ministry of Agriculture, Fisheries and food to compensate for that scheme if we voted against the Bill, and it was not passed. Therefore, we shall not divide the House. Nevertheless, I hope that the milk producers will never again be put into such a position by such an ill-considered Bill, and such a helpless, half-thought-out scheme as that to which the Minister of Agriculture, Fisheries and Food consented in Brussels.

Mr. Malcolm Bruce: I wish to speak in the debate because I am concerned about the fact that the endorsement of the Bill will effectively endorse the considerate waste of public money that has gone into the dairy industry as a result of the Government's

incompetence over the past two or three years. That is why the Bill is of concern not just to rural Members of Parliament but to all Members.
Like my hon. Friends, I have been out and about talking to the farmers in my constituency. I have come across a farmer with a large farm. I support the purpose of the bill, which is to protect the small farmer. That large-scale farmer was able to set up a new dairy venture two years ago, for which he received no less than £250,000 of public money to invest in a new milking parlour and for which he now cannot get a quota to produce an economic throughput of milk. If that is not an example of Government incompetence and misuse of public funds, I do not know what is.
The House has every reason to be concerned at the way that this issue has been handled by the Government and the misuse of public funds that has gone into the scheme which the Bill represents in terms of future compensation.
In the circumstances, the House has to realise that the Government are asking us to support a move that will effectively condone the misuse of public money on a huge scale. One farmer getting £250,000 is indefensible. As there is merely barracking from the few Labour Members who are here, the Liberal party is representing the real opposition to the Bill.

Mr. MacGregor: We have had many opportunities to debate milk quotas recently, and I do not think that the House will wish me to go over the whole issue again at this hour of the night. Nor do I think that you, with your sharp eyes for order Mr. Deputy Speaker, would allow me to. I shall confine myself to what the Bill is about, and will not stray much more widely.
Had the hon. Member for Gordon (Mr. Bruce) been present for more of the debates that we have had on milk quotas, he would realise that, as usual, the Liberal party is speaking with two voices. I have been urged to spend more and more money on the outgoers scheme by that party, but he is now complaining about the misuse of public funds through the outgoers scheme. He should be more consistent and listen to the debates.

Sir Geoffrey Finsberg: Does my hon. Friend agree that the number of Liberals here tonight is the largest that we have seen after midnight since they propped up the Government of the right hon. Member for Cardiff, South and Penarth (Mr. Callaghan)?

Mr. MacGregor: I gave way to my hon. Friend because, unlike some hon. Members who have spoken at the end of the debate, he has been sitting patiently in the Chamber throughout the debate.
On the three points made by the right hon. Member for Tweeddale, Ettrick and Lauderdale (Mr. Steel), I say to him with great respect and not in any antagonistic sense that if he had attended rather more of our agricultiure debates he would have understood some of the points that he criticised. First, he said that there had been considerable inconsistency in the Community's general approach to the dairy sector. It is not the sole responsibility of any one member state and it is certainly not the sole responsibility of this Government.
I agree with the right hon. Gentleman that schemes have been introduced at Community level which have not been thought through and which therefore have hot been


effective. The previous scheme which was designed to encourage people to get out of the dairy sector was ineffective. That scheme was negotiated at Community level, and we do not always get what we want at Community level. The difficulty about the scheme was that a five year time limit was placed upon it. Therefore, a considerable number of people were able to get out of dairying with the help of public funds and were then able to re-enter it before the quota system was introduced.
I was always very critical about that scheme. I go further. I take the right hon. Gentleman's point that there was inconsistency about the considerable encouragement of dairy expansion schemes while the attempts that were made to cut back on the surpluses were ineffective. Nevertheless, it was entirely right that United Kingdom farmers should have the opportunity to take advantage of these schemes. They enabled farmers to become more efficient and effective and to update their businesses and expand. It was right that they should have this opportunity while this remained the Community's approach. The Government would have been very heavily criticised if they had taken a purist view and said, "We are not going to let our farmers have the benefit of Community subsidies while farmers in all of the other member states enjoy them."
The United Kingdom Government have consistently argued for price restraint in the dairy sector. If their warnings about the need not to have big price increases year by year in the earlier price reviews had been heeded, probably it would not have been necessary to introduce the quota system. But we were unable to carry the other member states with us. When the original Community reform proposals of the Commission relating to milk were made known we made it clear that we should have to consider getting a quota system into a form that would be acceptable to United Kingdom producers.
There were illogicalities and inconsistencies in the previous approach. Although attempts were made to restrain production, they did not work. Because production increased to the level that it did while the consumption of many dairy products was falling, and surpluses were therefore rising and the cost of disposing of those surpluses was going through the roof, something had to be done. The result was the quota system. It is interesting to note that no Opposition speaker has referred to the fact that the costs of disposing of the dairy surpluses with which we were faced when my right hon. Friend the Member for Westmorland and Lonsdale (Mr. Jopling) and I attended the discussions about reforms in the Council of Ministers were very substantial and indefensible. I hope the right hon. Gentleman recognises that we had to take painful decisions. We did not like having to take them, but we were faced with the real probability that Community money for agriculture would run out altogether if something was not done.
On the right hon. Gentleman's second point, he quite rightly referred to the fact that it is the smallish herds on single purpose farms that are hardest hit, but he has failed to take into account the fact that the Government agree with him about that. The primary objective of the outgoers scheme is to help the small producers who wish to stay in milk production. I believe that it is the most effective way in which we can help them.
I am sorry that the hon. Member for Ceredigion and Pembroke, North (Mr. Howells) repeated a point that he has made in Committee about which he knows I am convinced is wrong. He says that we were wrong to start giving the offers to the smaller producers to come out. The objective was to help the small producers who want to stay in. But the scheme was oversubscribed and we could not make offers to everyone. Therefore, we took the view that as the smallest producers with no other option may wish to have the opportunity to take up the outgoers scheme — it is entirely voluntary and would depend on their individual circumstances—it was right to give them the choice first to do so. But if none of them had taken it up I would not have blamed them and we should then have gone on to the bigger producers.

Mr. Geraint Howells: I am sure that the Minister is well aware that the Government, as a result of their proposals, have got rid of 241 small dairy producers in my county to try to help another 250 producers. It is a great shame that all the pressure has been put on the small producers.

Mr. MacGregor: I have told the hon. Gentleman many times that there has been no pressure whatever. His figures are slightly too large, but I do not quibble with that. We simply felt, and I think that small producers are grateful, that we should give them the opportunity first and it was up to them to decide. We have constantly emphasised that the real purpose is to help the small producers who wish to remain in dairy farming.
The hon. Gentleman should recognise that the small producers in Wales are being helped by the outgoers scheme because fewer small producers are taking up the option. About 13 per cent. are taking up the option of the outgoers scheme, but Wales will benefit from 25 per cent. of the quota to be reallocated. There is a considerable swing to small producers in Wales as a result of the scheme.
The right hon. Member for Tweeddale, Ettrick and Lauderdale talked about the tribunal and panel system. The dilemma that we face was brought out by the hon. Member for Caernarfon (Mr. Wigley), who urged us to get on with the scheme because all producers with secondary applications want to know where they stand. I agree. We have been eager to get them to a position where they know where they stand as quickly as possible.
Equally, we wanted a fair and objective scheme based on individual circumstances, properly assessed by a group of experienced people, not by ministerial fiat, so that the scheme could be seen to be fair and so that every producer was given a fair hearing.
Of course there are discrepancies in panel judgments, but there is an opportunity to appeal to the tribunal and it is the tribunal which takes a national view and can iron out any of those problems. Given the need to reach decisions as quickly as possible, the large number of producers making secondary applications and the need for a fair system, I think that we got the balance right. I should like to pay a considerable tribute to the members of the panels and tribunal who, in all the circumstances, have done an excellent job.

Mr. Penhaligon: Will the Minister confirm that the reality is that if a constituent came to his Member of Parliament and that Member went to the bother and effort, as we all have done for individual problems, to raise an


individual case on the Floor of the House, and if it were presented so articulately that the Minister was convinced of the justice of the case, the Minister has drawn up the regulations in such a way that when the appeals procedure that is currently going on is completed the Minister could do nothing about it?

Mr. MacGregor: We set up the system bearing in mind the need to reach decisions fairly quickly. If we had followed the route that has been suggested with endless opportunities for appeal, we would be going on into next year and the year after and that would not have suited the producers who want to know where they stand. This was an unusual operation in order to deal with the situation.
The hon. Member for Newry and Armagh (Mr. Nicholson) described the outgoers scheme as a complete disaster in Northern Ireland. That is putting it much too strongly. As he will know, 161 producers, representing 10·5 million litres in a full year, have already accepted the outgoers scheme. So there is already a considerable acceptance. But I agree that the response to the outgoers scheme has fallen short of our targets and been disappointing. It has not been a complete disaster, but it has been disappointing.
In conjunction with the Secretary of State for Northern Ireland, as I said on Second Reading, we are continuing to look for ways to deal with the difficulties that arise from that poor response, but we are not yet in a position to reach decisions. We are still waiting to discover the final position on the England and Wales outgoers scheme. In the meantime, the scheme is to be reopened in the Province for two weeks from 11 February to see whether it is possible to bring in a further quota.
The right hon. Member for Strangford (Mr. Taylor) talked about the payment of a superlevy. We have said clearly that until the system has been operated fairly and properly in all member states we shall not pay superlevy, but we are ready and in a position to do so. What happens in Northern Ireland will depend upon the outcome of—

Mr. Deputy Speaker: Order. The Minister said that he had taken into account what I said earlier, but now he is discussing Northern Ireland, and the Bill specifically says that it does not extend to Northern Ireland. The Minister must wait until an order for Northern Ireland comes before the House.

Mr. MacGregor: A tiny part of the Bill does affect Northern Ireland.

Mr. John David Taylor: As a result of the Bill, will the free quotas be exchangeable within the United Kingdom and therefore transferable to another region of the United Kingdom-Northern Ireland?

Mr. MacGregor: We are straining at the rules of order, but the Bill includes a clause about Northern Ireland. Perhaps I may refer to it, without straining your patience, Mr. Deputy Speaker.

Mr. Nicholson: Northern Ireland is included in the Bill and we shall be presented with an Order in Council on which we, representing dairy farmers in Northern Ireland, will riot be allowed to make one comment. That is ridiculous. I should like to say much more, but I realise the time of night.

Mr. Deputy Speaker: Clause 6 states than an Order in Council

shall be subject to annulment in pursuance of a resolution of either House.
That indicates that there will be an opportunity to discuss the Northern Ireland application of the measure.

Mr. MacGregor: I have responded to the argument because I recognise the importance of the outgoers scheme to Northern Ireland. A proposal will be coming before the Council of Ministers to give the possibility—in the first year only — to adjust quotas between regions. If that becomes part of Community regulations between now and the end of March, it will give us the opportunity, if we produce short of quota in England and Wales, of adjusting to Northern Ireland. It might be helpful to Northern Ireland producers.
I was asked by the hon. Member for Truro (Mr. Penhaligon) to explain the progress of the outgoers scheme. A total of 3,888 producers in England and Wales have been invited to become outgoers — that is, those with up to 387,000 litres. Already 1,252 have accepted, surrendering quota of 154·4 million litres. That is 10 million litres up on the time when we last debated this measure.
First year payments have already been made to 1.046 producers at a total cost of £3 million. A considerable number of producers are in the pipeline—those who are still special case applicants who have been offered the outgoers scheme but who have been told that they do not need to make a decision until they know about their secondary applications, and those in the latest tranches who have still four weeks, or less, to make up their minds.
There ae 832 producers in categories with quotas of 190 million litres. If all accepted, we should obviously be over the top of our target of 289 million litres, but we know hat all will not accept. We are taking a calculate risk.
There is another good reason or moving in tranches in making offers. Many people are worried about the effect on the beef market if everyone took up the outgoers scheme straight away. That is why we have staggered the tranches and why the scheme has gone well and has not had the effect on the beef market that some people were afraid that it would have.
All the signs are that we shall get the 289 million litres and be able to meet all exceptional hardship claims this year. Obviously we shall get less quota this year than next—because many of the outgoers have already used up a considerable amount of their quota — but exceptional hardship claims will be met, and for the small producers we shall be able to meet our pledge next year of getting them back to their 1983 production levels up to 200,000 litres.
This year they will not be paying any superlevy, so it is next year that counts and we will be able to meet our pledge because of the success of the scheme, which suggest that the incentives are sufficient to encourage enough people to take advantage of it.
The outgoers scheme is successful. It is achieving its objectives in a way which is not disrupting the beef market, and in a way which will enable us to help all small producers who wish to stay in, and it has enabled us already to help those who have decided voluntarily to get out.
I agree with the hon. Member for Pontypridd (Mr. John) that it would be foolish for hon. Members to oppose the Bill tonight because it is giving a beneficial advantage to many producers and is helping us to restructure the dairy




industry in this difficult situation. It would be a grave mistake, therefore, for hon. Members to try to throw the Bill out because that would prevent us from going ahead with the proper authorisation for the rest of the payments under the scheme and would not enable a future Government, if they so wished, to introduce another scheme. Dairy producers would not understand it if hon. Members attempted to oppose the Bill tonight, and on that basis I commend the measure to the House.

Mr. Ashdown: I apologise to hon. Members for delaying them and I apologise to the Minister for having failed to catch your eye, Mr. Deputy Speaker, before he spoke because I should have liked him to have answered some questions.
Despite the Minister's blandishments, my hon. Friends and I will vote against the Third Reading. I have no doubt that the Bill will get through and that a scheme, though massively flawed, may be better than none. But the reality is that the measure is totally inadequate and requires us to lay a marker saying, "We at least regard it as inadequate and disruptive to the industry." If we do nothing else, we shall be laying a marker calling on the Government to produce a better measure.
The Minister claims that dairy farmers will not understand why we are voting against the Bill. That is not my experience. Dairy farmers understand that the Bill is flawed and inadequate. I could give many examples of those flaws, but I will confine myself to three.
First, whatever the Minister may claim, the Bill will result in fewer small family farms than were previously within the British farming infrastructure. The Minister said that many small farmers had agreed voluntarily to take the outgoers scheme. He is right. They had no alternative. The imposition of milk quotas reduced many of them to below viability, and if he comes to my constituency I will take him to a number of farms in precisely that position.
One farmer in my constituency has had to dispense with his own son on the farm. He was training him with a view to taking the farm over in due course—[Interruption.] His son was working as a labourer on the farm, learning the business, but he had to go. He had to cause his son to leave the business as he was able no longer to run the farm as a viable unit with the son as a labourer. He had no option but to take the outgoers' scheme. The Minister spoke of choice and of farmers exercising their own free will in taking the outgoers' scheme. The reality is that many of them have been forced to do so.
The Bill is not increasing the number of small farms in Britain. It is not giving asssistance to small family farms, which is part of Liberal farming policy. That is a sector of farming that needs positive encouragement. Whatever the Minister says about the freedom of choice that has been exercised, he cannot deny that the sum total of the effect of the Bill will be fewer family farms and fewer small farms. That cannot be in the best interests of the British farming community.
Our second reason for voting against the Bill stems from the Minister's remarks about the need to have a degree of flexibility between lump sum payments and instalments. That is what he wishes for the future. The Bill provides him with the opportunity to give the farmer the choice of accepting instalments or a lump sum payment and he has refused to allow him to have it. We know why.
The Minister wants to have that choice himself. The choice will be dictated by the needs of the Treasury and imposed by the Minister and not by those of the farmer in the light of the business conditions in which he finds himself. The Minister wishes to retain flexibility for himself rather than giving it to the farmer — [Interruption.] The hon. Member for Carrick, Cumnock and Doon Valley (Mr. Foulkes) seems to want to intervene from a sedentary position. If he wishes to intervene, I shall gladly give way to allow him to do so.
Lastly, and fundamentally, the Bill will remove certain rights from tenants in a way which will undermine their ability to be able to continue farming. My hon. Friend the Member for Truro (Mr. Penhaligon) asked the Minister who it was who had a veto over these provisions and the Minister gave a pleasant but opaque answer. The reality is that landlords will have a veto over the operation of the Bill in so far as it affects tenants.
I have given three fundamental reasons to show why the Bill is inadequate. It does not meet the needs of the farming community and in the end a Bill will have to be introduced that does that more effectively.

Mr. David Harris: rose—

Mr. Ashdown: That is why we shall oppose the Bill.

Question put, That the Bill be now read the Third time:—

The House divided: Ayes 113, Noes 14.

Division No. 93]
[2.18 am



AYES


Amess, David
Key, Robert


Ancram, Michael
King, Roger (B'ham N'field)


Ashby, David
Lang, Ian


Baker, Nicholas (N Dorset)
Lawler, Geoffrey


Beaumont-Dark, Anthony
Lightbown, David


Bellingham, Henry
Lloyd, Peter, (Fareham)


Bevan, David Gilroy
Lord, Michael


Biggs-Davison, Sir John
Macfarlane, Neil


Boscawen, Hon Robert
MacGregor, John


Bottomley, Peter
Maclean, David John


Bottomley, Mrs Virginia
Major, John


Bowden, Gerald (Dulwich)
Malins, Humfrey


Brandon-Bravo, Martin
Marland, Paul


Bright, Graham
Mather, Carol


Brinton, Tim
Merchant, Piers


Brooke, Hon Peter
Meyer, Sir Anthony


Bruinvels, Peter
Miller, Hal (B'grove)


Buck, Sir Antony
Mills, Iain (Meriden)


Budgen, Nick
Mills, Sir Peter (West Devon)


Burt, Alistair
Moate, Roger


Cash, William
Morris, M. (N'hampton, S)


Chapman, Sydney
Moynihan, Hon C.


Chope, Christopher
Murphy, Christopher


Coombs, Simon
Nelson, Anthony


Cope, John
Neubert, Michael


Couchman, James
Newton, Tony


Dorrell, Stephen
Nicholls, Patrick


Dover, Den
Norris, Steven


Dunn, Robert
Page, Sir John (Harrow W)


Durant, Tony
Page, Richard (Herts SW)


Edwards, Rt Hon N. (P'broke)
Pawsey, James


Fallon, Michael
Portillo, Michael


Favell, Anthony
Rhys Williams, Sir Brandon


Finsberg, Sir Geoffrey
Roberts, Wyn (Conwy)


Gale, Roger
Roe, Mrs Marion



Gregory, Conal
Rowe, Andrew


Gummer, John Selwyn
Sackville, Hon Thomas


Hamilton, Hon A. (Epsom)
Sainsbury, Hon Timothy


Harris, David
Shepherd, Colin (Hereford)


Hawkins, C. (High Peak)
Skeet, T. H. H.


Hayes, J.
Smith, Tim (Beaconsfield)


Hind, Kenneth
Soames, Hon Nicholas


Holt, Richard
Speed, Keith






Spencer, Derek
Waddington, David


Spicer, Jim (W Dorset)
Wardle, C. (Bexhill)


Stanbrook, Ivor
Watts, John


Stevens, Lewis (Nuneaton)
Wells, Bowen (Hertford)


Stewart, Andrew (Sherwood)
Wheeler, John


Stradling Thomas, J.
Whitfield, John


Sumberg, David
Whitney, Raymond


Taylor, John (Solihull)
Wilkinson, John


Terlezki, Stefan
Wolfson, Mark


Thomas, Rt Hon Peter
Wood, Timothy


Thompson, Patrick (N'ich N)
Yeo, Tim


Thorne, Neil (Ilford S)



Thurnham, Peter
Tellers for the Ayes:


Tracey, Richard
Mr. Tristan Garel-Jones and


Trippier, David
Mr. Mark Lennox-Boyd.


Twinn, Dr Ian



NOES


Alton, David
Penhaligon, David


Ashdown, Paddy
Ross, Stephen (Isle of Wight)


Bruce, Malcolm
Steel, Rt Hon David


Howells, Geraint
Taylor, Rt Hon John David


Hughes, Simon (Southwark)
Wigley, Dafydd


Kennedy, Charles



Maginnis, Ken
Tellers for the Noes:


Nicholson, J.
Mr. A. J. Beith and


Parry, Robert
Mr. Michael Meadowcroft.

Question accordingly agreed to.

Bill read the Third time, and passed.

Orders of the Day — Town and Country Planning (Compensation) Bill

Order for Second Reading read.

The Parliamentary Under-Secretary of State for the Environment (Mr. Neil Macfarlane): I beg to move, That the Bill be now read a Second time.
When planning permission for the development of land is refused, the applicant is not normally entitled to compensation, but there are a few exceptions, and they include the provisions of sections 165 and 169 of the Town and Country Planning Act 1971 and the equivalent Scottish provisions which are of course of great interest to my hon. Friend the Parliamentary Under-Secretary of State for Scotland the Member for Edinburgh, South (Mr. Ancram).
This is an arcane byway of planning legislation, which has recently been giving rise to difficulties. The purpose of this Bill is to deal with those problems, and to bring the provisions of sections 165 and 169 more into line with current thinking.
I shall start with section 165. The usual way of obtaining planning permission is by putting a specific development proposal to the local planning authority, but section 24 of the 1971 Act also allows my right hon. Friend the Secretary of State to grant planning permission by means of a development order, which may either relate to a specific project or operate more generally.
Thus, the Town and Country Planning General Development Order grants planning permission for no fewer than 23 classes of development ranging from minor house extensions and the erection of gates, fences and walls to extensions to industrial premises — within certain limits—and development carried out by statutory undertakers. A development order is a statutory instrument, and Parliament controls the use of this power through the negative resolution procedure.
Section 165 relates to the situation that arises when a development order is amended. It provides that when planning permission for the development of land has been granted by a development order, when that permission is withdrawn, for example by the revocation or amendment of the order, and an application for planning permission for the same development is then refused, or granted subject to conditions, compensation is payable to the applicant for losses that are directly attributable to the withdrawal of the development order permission.
We are not aware of any compensation claim that has actually been made successfully under section 165. One reason is that permission granted by development orders has very rarely been withdrawn. In 1983, however, we amended the general development order to ensure that any development likely to involve the presence of a notifiable quantity of a hazardous substance would require a specific grant of planning permission from the local planning authority. Authorities have expressed concern that, if they refuse an application for development for which the order previously granted permission — and this includes quite substantial industrial extensions — they may incur a substantial compensation liability.
Again, I am not aware of any case in which that has actually happened, and I would expect an industrialist who was refused planning permission on safety grounds to try


to redesign his proposal to make it safe rather than to press for compensation after the refusal. Nevertheless, the concern expressed by local planning authorities is understandable and real.
If a landowner has firm proposals for carrying out development permitted by a development order — if he has begun to draw up plans, buy materials, or has even let a contract for the work — it is right that he should be compensated for the abortive expenditure that he will have incurred if the permission is suddenly taken away.
However, under the present terms of section 165, the right to compensation goes much wider than that. In particular, it contains no time limit, so that the refusal of a planning application many years after the revocation or amendment of a development order may create a compensation liability. The landowner may have had no plans for carrying out the development during the time when the permission was available — indeed he may have bought the land after the order had been amended—but he may still be able to argue that he has suffered loss because he is not allowed to carry out the development.
The situation is wholly unsatisfactory. The Bill therefore provides that compensation will only be payable for adverse decisions on applications submitted within 12 months of the revocation or amendment of a development order. If a landowner already has a scheme in hand, this allows him time to put in his planning application. If he does not already have a scheme in hand, we can see no reason why compensation should be payable. A development order is not permanent, and the risk that a planning permission granted by a development order will be taken away before it is exercised is no greater than many other risks that are accepted as an essential part of a landowner's lot, and for which no compensation is payable.
Under section 169, compensation is payable for the refusal or conditional grant of certain classes of development which are specified in Part II of schedule 8 to the Act. This includes the enlargement of buildings which were in existence at the time of the introduction of planning control in 1948 so long as the cubic content of the original building is not increased by more than 10 per cent. Before compensation is payable, there has first to be an appeal to the Secretary of State against the planning authority's decision.
The reasoning behind this provision is that in 1947 the classes of development in schedule 8 were regarded as so minor that they were within the existing use of the land, and the landowner ought not to lose his right to carry them out. It followed that, if permission for such development had to be refused under the new planning system, compensation should be paid.
Most, but not all, of the classes of development specified in the schedule are also included in the general development order, about which I have just been speaking, so that planning permission is granted for them automatically and no question of compensation therefore arises. One of the main exceptions is extensions to blocks of flats. At one time, there were different views about the precise extent of the right to compensation if such applications were refused, but in 1983, in the case of Camden London borough v. Peaktop Properties (Hampstead) Limited the Court of Appeal ruled that, in

principle, compensation would be payable for the refusal of planning permission for the addition of 17 flats to the top of a block of flats that had been in existence on 1 July 1948. That is the matter about which my hon. Friend the Member for Hampstead and Highgate (Sir G. Finsberg) came to see me. The court rejected the council's interpretation of section 169 that compensation was not payable when the proposal was to create separate flats intended to be in separate occupations from the existing block.
The effect of the court's decision has been dramatic and wholly unacceptable to the Government. According to a well-researched report which a group of residents associations handed to me just before Christmas, in the period 1979–82 the number of such applications was running at between one and four each year. In 1983, there were 12, and in 1984 there were 21. I know from anxious inquiries from planning authorities, particularly in central London, that the trickle of applications has now become a flood. I am told that this is because market factors are now favourable to the economics of such a project. I suspect that the truth is that many of the applications are being submitted in the hope that they will be refused and that a hefty compensation payment will result.
Last February, the Estates Law Digest organised a seminar entitled:
section 169 Town and Country Planning Act 1971 — A Cascade of Gold for every building owner".
It drew attention to:
The great possibilities for compensation for the owners of buildings which existed in 1947
In the light of the Peaktop decision, and examined
the essential conditions which have to be fulfilled to secure compensation".
Is it surprising that the number of applications has been going up ever since?
Of course, the more unacceptable the proposal is in planning terms—the worse the effect that it has on the environment — the more certain it becomes that the planning authority will be compelled to refuse planning permission and to pay compensation. The local authority must either fail to meet its obligations to safeguard the proper planning of its area, or it must incur financial liabilities which, at a time of financial stringency, it simply cannot afford to meet.
I recognise that section 169 and schedule 8 represent vested property rights, as section 165 does not, and that such rights should not be taken away lightly, even if it can be argued that attitudes to planning control have changed considerably since the time of the 1947 Act, but according to the residents associations' report, there are an estimated 1,230 privately-owned blocks of 10 or more flats built before 1948 in the three central London boroughs alone. We cannot allow the wholly unrestrained extension of these blocks, with all the effects that this will have on visual appearance and on the intensification of parking problems, to say nothing of the psychological effect on residents of the existing flats while the work is going on.
I have come to the reluctant conclusion that, in this type of case, there is clear evidence that the provisions of section 169 are being abused and that we must legislate to restore the position. For the moment at least, we do not regard it as either necessary or right to go beyond the specific abuse relating to penthouse flats, but we might have to examine the matter again if developrs begin to abuse other schedule 8 rights in the same way.
Finally, I should say something about the commencement provisions in clause 3. The amendment to section 165 and its Scottish equivalent will take effect on Royal Assent, so that, if a development order is amended after that date, there will be 12 months for a landowner to put in a planning application before he loses his compensation rights. In the case of amendments that have already been made to the general development order, like the one relating to hazardous development, the 12-month period of grace will run from the date of Royal Assent.
In the case of section 169, however, compensation will not be payable for adverse decisions on penthouse flat applications submitted on or after the date of introduction of the Bill on 24 January. While such a provision is unusual in planning, it is quite common in fiscal legislation. Speculators have already had all too long to put in their applications, while we had what turned out to be fruitless discussions with the representatives of property interests. If they are given a further period of grace, there is no reason why applications should not be made for almost every pre-1948 block before the compensation right is withdrawn, and we should simply be shutting the stable door long after the horse had bolted.

Mr. Sydney Chapman: My hon. Friend is going into great detail about the provisions of the Bill. Will he say something about the amendment to section 169 of the Town and Country Planning Act 1971, which is mirrored by section 158 of the Town and Country Planning (Scotland) Act 1972? It refers to pre-1 July 1948 blocks of flats being enlarged. Does it also refer to applications to redevelop areas where blocks of flats that existed prior to 1 July 1948 are proposed to be demolished and redeveloped to the extent of up to 10 per cent. more than the original area?

Mr. Macfarlane: That is not contained in the proposals. The legislation relates to every block before 1 July 1948 where there is a proposed alteration to an existing block. Demolition does not come into it. We considered the entire range of opportunities and possibilities. Hon. Members may wish to pursue these points a great deal further, and we may have to consider them at a later stage and in another place.
We seriously considered covering applications already in the pipeline. This may help my hon. Friend to some extent. However, we reluctantly concluded that that would represent an unacceptable degree of retrospection, and open us to the charge of confiscatory legislation. We believe that the provisions of clause 3 are a reasonable balance between the conflicting interests.
This is a technical bill. The Government responded to the points made by my hon. Friends the Members for Hampstead and Highgate, for Westminster, North (Mr. Wheeler), for Kensington (Sir B. Rhys Williams), and by many other right hon. and hon. Members. It deals with an important area which has been cynically abused in recent months. I commend the Bill to the House.

Dr. David Clark: Without hesitation, the Opposition welcome the Bill. I agree with the Minister that it is necessary and urgent. I hope that he did not mean it when he said that he was reluctant to introduce the Bill, because we are extremely pleased that he has done so. It is an important piece of legislation.
It would be churlish of us not to welcome the Bill, because, as the Minister knows, when we discussed the Town and Country Planning General Development (Amendment) Order 1983 I pressed him srongly on this point. I was worried about the use of hazardous substances and premises. That continues to disturb us, because we hear of more and more worrying examples and reports of hazardous chemicals and substances being manufactured or stored in town and city centres.
On 1 February The Guardian reported a case in Norfolk in which 89 people were taken to hospital. The Health and Safety Executive in St. Helens stated that if there was an explosion there people would be endangered within a one-mile radius. Planning authorities have been extremely concerned about legislation to protect people. In 1983 the Government took some necessary steps. The Bill is urgent, which is why we are helping the Government to get it through the House.
At that time we discussed section 165 of the 1971 Act, and I raised the case of Carless Chemicals in Middlesbrough. Middlesbrough corporation was involved to the tune of about £800,000. It had to pay that to a firm not to expand in the centre of Middlesbrough. Local authorities have been worried about their liability to pay compensation when they revoke general development orders. The Bill appears to cover that point.
I shall not say much about clause 1(2), which is about the 10 per cent. extension—the permitted development of pre-1948 dwellings is generally known — except to say that we strongly deplore the racketeering that is going on, especially in London. We deplore the pure speculation of property developers. It is little short of scandalous that, as the Minister said, a seminar was held last year entitled, "A cascade of gold for every business owner". The Government should have the support of every hon. Member in trying to plug that loophole.
Rural areas are also affected, because this is a town and country planning measure. The 1977 general development order is being reviewed by the Government, and the Opposition believe that the time has come for the review to be completed. We do not understand why there is not more control over the planning of the rural environment. I understand that a serious candidate for exemption from general development order status is livestock development in the proximity of residential dwellings. We all know how serious a problem such developments can be. Although we want farmers to comply with general planning, we do not wish them to be penalised financially for schemes which they entered into generally. As the Minister knows, farmers are often encouraged by the agricultural and horticultural development scheme to submit five or even seven-year development plans. The purpose is to assist farmers to bring their incomes up to levels comparable with non-agricultural incomes over a period of five or six years.
Naturally, such plans are conceived in the light of prevailing planning regulations. What worries me is that a farmer may be refused consent for a building that was planned in his rolling seven-year programme. Will the Government consider whether the 12-month limit is too tight in this case? In some cases it might be better to have a 24-month period.

Mr. Macfarlane: I should make it clear to the House that the Government have agonised over this decision for several months. Our discussions and negotiations with


interested parties lead me to believe that we must consider the time element. That will have to be done at a later stage, or in another place, but I note what the hon. Gentleman says.

Dr. Clark: I am grateful for that assurance, and I take it in the spirit in which it was given.
However, may I develop the point a little further? Although the discussions are mostly about livestock development, I wish to draw to the Minister's attention the fact that not only agricultural development is causing problems with the general development orders. Some farm buildings that are used for other purposes also cause great problems. I take as an example a case in Lancaster. As the House will know, under class 6 of the first schedule to the general development order, a farmer can erect a building of 465 square metres, and 12m high, as long as it is more than 90m from the next building.
I was invited by the chairman of the planning committee of Lancaster council to visit such a building at Quernmore near Lancaster. It was outrageous. The farmer—I should call him a mushroom grower—told Lancaster city council that he wished to build mushroom sheds. I should emphasise that the mushrooms could have been grown in any disused cotton mill on the outskirts of Lancaster, but the farmer wished to erect them on his farm in an area of outstanding natural beauty. They are extremely unsightly polythene sheds which in no way fit the vernacular architecture of the area.
Lancaster city council tried to do something about what had been done. It tried to persuade the farmer that this was not the appropriate way out. I wrote to the Secretary of State about it, as did Lancaster city council. An article 4 directive was given. However, as the House knows, an article 4 directive does not stop development, and the farmer had cut the sod on each of his six sites. I went up last week to view this again, and it is most unsightly.
I urge the Government, when reviewing the general development order to take into account other buildings which may not necessarily be livestock buildings, because they cause a great deal of inconvenience visually and in terms of smells.
In the hope that the Minister will take those points on board we welcome the Bill and will do what we can to speed its passage through the House. I hope that the Minister will take seriously the points that have been raised, especially with regard to the timing, so that it will be possible to put this right in another place.

Sir Geoffrey Finsberg: First, I thank my hon. Friend the Minister and our right hon. Friend for introducing the Bill. I have pestered Ministers at Marsham street — which itself is not a building of outstanding natural beauty — heavily in the last year. I know the problems that they have experienced in trying to find a simple form of words to cover a most obnoxious practice.
I also thank the Opposition for their courtesy and help in trying to speed the passage of the Bill, which deals with an issue that is wholly non-political.
If I may say so, for almost the first time in my political life in Parliament, I am doing something that Camden borough council would wish me to do, so there is a complete bipartisanship.
The sort of thing that has been happening was instanced by my hon. Friend in the case of Peaktop, a mushroom—if the hon. Member for South Shields (Dr. Clark) will allow me to use that word—company created merely for the purpose of getting a crock of gold. No reputable property company has been indulging in this sort of practice, but a host of small property companies have come along and looked particularly at places like central London and Hampstead where there are mansion block blocks of flats. These companies have decided that they will make a planning application to add a storey, irrespective of the dirt, the noise and the aggravation that this would cause to the tenants and, indeed, without heed to whether the building foundations would even bear the extension. If the council has tried to be prudent, it has had to face the possibility of paying heavy compensation. Camden took the decision to refuse the application by Peaktop. The case went to the Lands Tribunal. Camden ratepayers will have to pay £100,000 compensation as a result of the application having been refused. There is at least one legal interpretation which says that this appalling property company could have made a reapplication three months later, could have had it refused again and could have received another £100,000. That is the kind of racket that has been building up. As my hon. Friend rightly said, one needed to take urgent action in that case. I am delighted that the cut-off date was publication of the Bill.
I pay tribute to one of the Camden councillors, Commander Ron King, who has been doing a great deal of devilling on this matter to try to establish the extent of the problem. With me he has seen the Minister and he has been trying to ensure that the actions of the council were taken in such a way as not to show undue haste but to examine the cases carefully in the hope that legislation might come along. Legislation is here and the nuisance has been stopped. On behalf of a large number of residents of Camden, and particularly of Hampstead, in which most of the blocks of which I know exist, I offer a heartfelt vote of thanks to my hon. Friend the Minister which I hope can be extended to the House when the Bill is speeded from here to another place and quickly receives the Royal Assent.

Mr. John Wheeler: I shall be brief, it being such a late hour. I simply wish to add my thanks to my hon. Friend the Parliamentary Under-Secretary of State and to endorse all that he said, as well as the remarks of my hon. Friend the Member for Hampstead and Highgate (Sir G. Finsberg).
In my constituency a serious problem has been developing over property speculation. I am glad to see my hon. Friend the Member for City of London and Westminster, South (Mr. Brooke) in his seat. He knows, too, that in the City of Westminster great concern has been exhibited about the issue, and the local authority was anxious to see that proper action was taken. We are grateful that the Government are acting promptly and swiftly, and glad that the House is supporting the measure.

Mr. Simon Hughes: I shall also be brief. We, too, welcome the Bill. It is clear that there was a terrible dilemma, particularly for central London boroughs as planning authorities. They were confronted with two undesirable options. Either they had


to grant planning permission for the extension of the mansion blocks about which we have heard, with, as the hon. Member for Hampstead and Highgate (Sir G. Finsberg) said, all the inconvenience — in planning terms, they did not want to do that — or they had to refuse planning permission and pay substantial sums of compensation.
I should like to amplify the hon. Gentleman's explanation. The case went to appeal from the Lands Tribunal, and the finding went against Camden borough council. As soon as that happened the door was open, and the local authorities were all on a loser. It was then necessary for the Government to intervene to deal with the loophole that had been exemplified. That was important.
I have only one regret, and I do not say this as a criticism of the Minister. I understand that the problem was first brought formally to the Department's attention in October 1983 and informally in 1982. I appreciate that there have been several attempts to produce legislation — the hon. Member for Kensington (Sir B. Rhys Williams) introduced a Bill that has been superseded by this Bill. There have been strong Back-Bench representations on behalf of the boroughs, but it may be a valid, but minor, criticism that there could have been earlier action. However, we have got past that stage.
The Bill deals with two elements, as the Under-Secretary said. The second is hazardous waste and so on. I have always held the view that the use classes need regularly to be reviewed, particularly in this area, as science develops and uses change. One of the problems is that, because we have not responded quickly, inevitably there has been exploitation in that planning authorities have not been able to control adequately the developments in their areas. Once we are talking about hazardous waste and so on, we are talking about serious uses of land which, above all, planning authorities need the power to deal with.
We are dealing with a limited Bill that we all wish a speedy passage into law, but I hope that the Minister will accept that there are many pressures, which I hope his Department feels, for other reforms in planning law on issues that are underneath the surface. This is just the tip and the peak of the matter. It is not entirely the Minister's responsibility, although it is his Department's, but there are problems such as the landlord-tenant relationship in private mansion blocks, which I know are being reviewed by the Department of the Environment. There are issues under the surface, and the Bill deals only with the most extreme examples.
Subject to that request and concern that we do not just stop here and move quickly to make sure that the other matters are dealt with as soon and as comprehensively as possible, we welcome the Bill. We hope that the owners and residents, particularly in the mansion blocks and the areas of the four central London boroughs who have been most concerned have their problems alleviated and that the ratepayer and taxpayer do not have to foot the bills, when their money has gone into the pockets of those who have no scruples, and they needed the Government to intervene as they have done tonight.

Mr. Sydney Chapman: I wish to intervene on only a couple of points, and I do not wish to be ungrateful to my hon. Friend the Minister, who introduced in an expert manner what is a very

complicated, if not obscure, town and country planning measure. It has serious financial implications, but I am sure that both sides of the House will agree that that should not alter the rights to compensation unless we have carefully considered the implications. My hon. Friend the Minister has done that.
I wish to relate my remarks to the proposed amendment to section 169 of the principal Town and Country Planning Act 1971 — which is mirrored by section 158 of the equivalent 1972 Scottish Act. The anomaly could not have been foreseen, however clever the authors of the Town and Country Planning Act 1947 had been, or the authors of the 1971 or 1972 Acts had been. This raises the problem of the balance between giving the rights to an individual who owns property on the one hand, with respect for the wider implications of the Town and Country Planning Act for a community or a neighbour on the other.
It was an immensely sensible compromise that a man should be allowed to extend his property by up to 10 per cent. without going through the rigours of the town and country planning legislation. That is one thing, but it was never suspected that a substantial development could be added by an enlargement of up to 10 per cent. without the need for planning permission, or, if planning permission were denied, the right of compensation. The important point that must be stressed, and what the bill seeks to amend, is that the development is, in many cases, happening in areas of central London that have already been intensely developed to the maximum permitted density. My hon. Friend the Member for Hampstead and Highgate (Sir G. Finsberg) pointed this out. To allow those properties to be enlarged by putting a further floor on the top of the building would not only deny rights to light to the surrounding properties, but, with all the consequent problems of intensive development, creating problems of parking on the roads below and so on.
Therefore, my hon. Friend the Minister is right to introduce the legislation. I have only one or two inquiries, which I shall make now, to save further time later. Bearing in mind that the Appeal Court decision that raised this anomaly was made in the spring of 1983, and that this part of the Bill will take effect for applications from 24 January this year, what about the financial obligations that may be faced by many of the councils on the applications that have clearly been put in for spurious motives? There could be a considerable financial obligation on some of the local authorities. I should be grateful if my hon. Friend could touch on that point.
We are talking about denying rights to certain people, whether we think that they are deserving of those rights or not. I have no doubts about the merits of this measure. A local planning authority may try to use this Bill, when it becomes an Act of Parliament, to its advantage, and deny people what they think that their rights are. Under the existing town and country planning legislation, whenever a local planning authority refuses planning permission to an applicant, that applicant has the right of appeal to the Secretary of State. That is a cast-iron assurance that if the Bill is enacted the owner of such a property will not suffer any loss of rights and that the local planning authority will be given no unfair advantage. For that reason, I very much hope that the House will pass this measure.

Sir Brandon Rhys Williams: I should like to place on record a very warm welcome for this short but important Bill. It has particular relevance to the


borough which I have the honour to represent. I do not need to speak at length, because in introducing the Bill to the House my hon. Friend summarised so well the reasons for its introduction and the urgent need for it. There is an overwhelming case for its introduction by the Department.
Since the decision in the Peaktop properties case in 1983, it has been possible for owners of large structures in multiple occupation to put planning authorities in a position where either they have to approve planning applications which ought not to be approved or they have to incur liability for large sums in compensation which their ratepayers should not be required to pay. I recognise that it was not easy to find the appropriate way to reverse the decision of the Court of Appeal in the Peaktop properties case. In discussions with the Department I raised the possibility that it could be done by restricting its application to conservation areas, or possibly by placing an upper limit on the total amount that a local authority might be obliged to pay in compensation.
In the end, in order to help matters forward, I tabled in this Session a short Bill — the Planning Authorities (Restriction of Liability) Bill — and I am most grateful to my hon. Friends the Members for Westminster, North (Mr. Wheeler) and for Fulham (Mr. Stevens) for supporting me. We set that Bill down for Second Reading on 25 January. It was not an entire coincidence that in a very welcome move the Government decided to table their own Bill on the day previous to that on which my own Bill would have come up for Second Reading. I am also very pleased that the Department chose the remedy that I finally decided to recommend to the House in my Bill, namely, to allow the compensation to refer only to individual dwellings.
I need say no more in welcoming the Bill other than that I am very glad that tonight it will complete all of its stages in the House. I hope that very shortly the Bill will go through all its stages in the other place and soon become an Act.

Mr. Macfarlane: May I respond briefly to the many points that have been made. I am grateful for the welcome that the Bill has received from hon. Members. We have made a great step forward not only for the people of London but for the people of Scotland, and, perhaps, elsewhere. If I do not answer fully all the points that have been made, I shall write to hon. Members.
The hon. Member for South Shields (Dr. Clark) referred to hazardous substances. I believe that the amendment to section 165 goes a long way towards meeting the compensation problem which has been one of the main points of concern. But there are other problems. As soon as the parliamentary timetable permits I intend to introduce a new system under which written consent for the keeping of hazardous substances will have to be obtained, along the lines of the consultation paper which my Department published last July.
As for Carless chemicals, this would involve the removal of an existing factory, and it would continue to attract compensation. It has nothing to do with the permission granted by the general development order. As the hon. Gentleman knows, we are reviewing fully all the amendments to the general development order. The points that he made in his spech are well taken and well noted.
I have studied the case in Lancaster. We shall consult widely all of the interested parties. Agricultural intensive livestock units are, of course, an integral part of our consideration.
My hon. Friend the Member for Hampstead and Highgate (Sir G. Finsberg) talked about the problem of a landlord possibly being able to obtain compensation twice. That has been gone into thoroughly and I have concluded that it is not possible to obtain compensation twice for the same loss in value of land. The second refusal for similar development would therefore not give rise to a claim for compensation under section 169. I shall ensure that my hon. Friend has all the details.

Sir Geoffrey Finsberg: My hon. Friend has given a view based on legal opinion from his Department. The information that I gave was legal information available to Camden council. One will always find two lawyers who take different points of view. I only ask my hon. Friend to make sure that that cannot happen any more.

Mr. Macfarlane: I would not wish at this late hour to cast aspersions on the integrity of the lawyers whom we employ, but I shall make certain that there is some reasonable recognition of the points that my hon. Friend has made.
The point made by my hon. Friend the Member for Chipping Barnet (Mr. Chapman) has caused great concern. The hon. Member for Southwark and Bermondsey (Mr. Hughes) also mentioned the delays of 15 months or so that have occurred. We were prompted to introduce the legislation now because the floodgate was beginning to open.
It is difficult for my Department to provide accurate statistics of the likely number of applications in the pipelines which have occurred as a result of the seminar which was held at the Savoy in 1984. The fact that it was held there was symptomatic of the cascade of gold which it was hoped to develop on that occasion. We have tried to identify and understand the problems and financial obligations of the local authorities. There is no doubt that many of them could well be faced with anything up to an eight figure compensation problem. That is serious and has all sorts of impacts upon the rate support grant, which I shall not go into this evening. The problems facing the local authorities are well known. That figure could be excessive.
I accept that some planning authorities will have rooftop and flat applications before them, but where the landowner has done his part by submitting the application it would be wrong to take away his right to compensation retrospectively. Moreover, that could mean that authorities which had delayed giving a decision on such applications would escape a compensation liability, while those who had determined such applications promptly would be at risk and that would not be right.
The role of the Secretary of State is inherent throughout all the constitutional elements of planning law in Britain, and that still prevails.

Dr. David Clark: A number of the authorities are in penalty. For example, it was feared that Lancaster would go over the target if it applied for a stop order and would therefore be liable to compensation. There are precedents — I think that there was a case with Cumbria county council about sheep scab—where the Government were prepared to abate the special payments in cases where


authorities were going into penalty. Would the Minister be prepared to look into that with some London boroughs, because it is important?

Mr. Macfarlane: I am touched by the hon. Gentleman's concern for my hon. Friend the Member for Morecambe and Lunesdale (Mr. Lennox-Boyd), who is forbidden to participate in these affairs at the moment. His point affects many local authorities and I have no doubt that they will be swift in corning forward if they feel that they have any request to make. At the moment it is no integral part of the survey which I have initiated with the local authorities.
The House is giving an important approval tonight. I need to identify many issues with hon. Members, and I take note of them and am grateful for their comments.

Question put and agreed to.

Bill accordingly read a Second time.

Bill committed to a Committee of the whole House.—[Mr. Major.]

Bill immediately considered in Committee.

[MR. HAROLD WALKER in the Chair]

Clause 1

RESTRICTION ON COMPENSATION: ENGLAND AND WALES

Sir Brandon Rhys Williams: I beg to move amendment No. 1, in page 2, line 8, at the end add
'and any individual dwelling in the building would be enlarged by more than ten per cent.'.
I am obliged to you, Mr. Walker, for giving me special permission in the circumstances to move this short amendment in spite of the fact that I was able to table it only yesterday.
It seems that with the Bill as it stands a application could be made for an individual flat within a large structure to be expanded by an amount equal to 10 per cent.—not of its own original volume, but of the original volume of the whole structure. I ask my hon. Friend to examine the possibility of there being a defect in the drafting of the

Bill. If he is not happy to accept my wording, which is almost certainly defective, I hope he will ensure that the lacuna is removed from the Bill.

The Parliamentary Under-Secretary of State for the Environment (Mr. Neil Macfarlane): My hon. Friend the Member for Kensington (Sir B. Rhys Williams) has a point which he thinks important, but his amendment would not achieve that which he is trying to achieve. In some respects it would destroy what we are trying to do.
I understand my hon. Friend's point, but the Bill is limited to applications which would increase the number of flats in a block. That is what my hon. Friend is worried about. Penthouse extensions which convert the top storey of flats into maisonettes increase the value without increasing the number of units. The Bill provides that compensation is not payable when two conditions are met. The amendment adds a third precondition — that an extension must also relate to an extension of one or more individual flats by more than 10 per cent. before the compensation right is excluded.
That is incompatible with the second condition which I have mentioned. It would mean that compensation would continue to be payable for penthouse extensions which create new units rather than extend existing units. The amendment should have begun with the word "or" rather than the word "and".
I am ready to examine any evidence, and I shall look at the matter once again. It is important, and I want to be fully satisfied. I suggest that we examine the matter later or urge the House of Lords to table an amendment if necessary. I shall write to my hon. Friend on the subject and keep the House informed.

Sir Brandon Rhys Williams: I accept that I should have used the word "or" instead of "and" to convey my meaning. That proves that my amendment is defective. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 1 ordered to stand part of the Bill.

Clauses 2 and 3 ordered to stand part of the Bill.

Bill reported, without amendment.

Bill read the Third time, and passed.

Orders of the Day — West Midlands (Industrial Situation)

Motion made, and Question proposed, That this House do now adjourn.—[Mr. Major.]

Mr. Bruce George: We have heard a great deal in previous debates about the cascade of gold. I hope that some gold will cascade in the direction of my constituency. It is certainly long overdue.
I have made regular appeals in Adjournment debates to the Government to halt and reverse the decline of the west midlands and the town of Walsall, yet the situation deteriorates. A few statistics support that assertion. The west midlands has had the lowest rate of growth of any region in the country in the last 10 years. Between 1980 and 1984 the unemployment rate in the west midlands rose by over 10 per cent.—the worst regional figure in the country. Over half the unemployed are classed as long-term unemployed. The official unemployment figure for Walsall South is 7,675. But the actual figure is much worse, as it excludes much of Darlaston and, as we are aware, the unemployment figures have been skilfully manipulated to mask the real total. Without doubt, national unemployment is way over 4 million. In the Walsall area, 17·8 per cent. of the population is unemployed, way above the regional and national figures.
No doubt reassuring words will continue to emanate from the Government. Lord Young assured us a few weeks ago that Britain was not in recession. Try telling that to the army of workless in my constituency. I have the statistics of the increase in unemployment between the 1981 census and the figures for December 1984 on a ward basis.
In the St. Matthew's ward, the increase in unemployment between those few years was 45 per cent.; in the Bentley and Darlaston, North ward, 46·6 per cent. was the increase, much of it due to the collapse of engineering, of the nuts and bolts industry and of many large, well-known factories; and the allegedly more prosperous area of Paddock saw unemployment go up by a staggering 61·9 per cent. Where is the economic miracle that we were promised? What has happened to the so-called recovery?
Recent events have shown the Government's financial strategy to be bankrupt, as they have marched the nation on six years' hard slog in which the public services have been slashed and public works starved of investment so as to cut Government borrowing. The pay-off was the promise of lower interest rates. That has not happened. Now, the pound is at parity with another great currency, the rouble. That shows the depth to which we have sunk.
Regrettably, the Chancellor will not pay the price of the Government's failure. The rest of us will pay. House owners will pay the price by way of big increases in their monthly payments; industry will continue to pay because the big increases in interest rates will cost British industry at least £600 million this year; the unemployed will pay because the interest rates squeeze will force probably another 100,000 out of their jobs and into the dole queues.
If the Prime Minister succeeds in reducing unemployment in my constituency to the level it was when the Conservatives came to office in 1979 — when it was 5 per cent.—I will put a good word in with the principal of the West Midlands College of Higher Education and ask that she be awarded an honorary degree of the Council for

National Academic Awards—that is, if the Secretary of State for Education and Science has not closed the college down first. I cannot guarantee that my constituents will be as generous or forgiving as I am.
The Minister will, no doubt, tell the House of initiatives that will yield dividends—notably, assisted area status—but not everyone is as enthusiastic as the Government about the efficacy of the economic aspirins that my region is being given. I have a letter written by Mr. G. Bates, president of the Wolverhampton Association of Building Employers Confederation. He went to a seminar recently in Birmingham which looked into what would happen to the region because of assisted area status. He wrote:
I therefore attended a seminar staged by the Birmingham Chamber of Commerce which was to inform management of what was available to them under the new policy. I left the seminar completely deflated.
I hope he is wrong and that the measures will bring relief to an area that a few years ago was one of the most prosperous in the country.
Not only in employment and industry has my constituency suffered, but also in housing. As my hon. Friend the Member for Walsall, North (Mr. Winnick) knows well, we have made representations to the Government because their housing policy has been a disaster. Public sector housing has been halved and house improvement payments are drying up. Walsall has reached a crisis. Our surgeries are a weekly testimony to the failure of Government policy and to despair. There are over 12,500 on the housing waiting list and there are 30,000 unattended repairs. The local authority asked for £37 million under the HIP scheme and it received £9·5 million about a quarter of what it requested. The problems of single parents are appalling and the problems of single parent families are severe. In an excellent report entitled "Singled Out in Walsall" it is stated:
the problems of homelessness among single people of all ages are growing rapidly but especially among the young.
There has been such little house building. Surely one way in which the local economy can be boosted is by improving the infrastructure and getting the building workers back to work. This should happen, and I hope that it will.
One of the rays of sunlight over the sad events of the past few years has been the way in which some local individuals and groups have responded and are responding to the crisis. The Pleck Community Association has produced a most imaginative set of schemes to relieve unemployment in the area. I am following closely, as I hope the Minister will, one of the schemes that it is submitting. It seeks to remove much of the responsibility from the shoulders of small business men and to arrange for it to be taken on by experts from the association and by those who they will employ.
There is another experiment involving Darlaston and an experiment which is being undertaken by Roap hall. This is a sign of the way in which local individuals and groups can respond.
Another problem that besets the area is that of derelict land. Walsall has many attributes, but it is not among the most beautiful towns in the land. That is the consequence of industrialisation in years past. Much of the land in the town is derelict. It consists of 225 sites and extends over 560 hectares. Despite the immensity of the west midlands and black country problems of dereliction, Government aid has been cut, though I must acknowledge in fairness that Walsall is getting a slightly larger share of a smaller cake. Derelict land is blighting housing. It is making it



difficult to attract industry to the area and it is a sheer eyesore. Dereliction is growing at a faster rate than the rate at which land is being brought back into use. Walsall has 29 per cent. more derelict land than in 1983. There is a need for land to be brought back into proper use and we need central Government funding. The Government should not seek to rape the green belt in my area instead of pursuing a proper policy of land reclamation.
Linked to the problem of derelict land is that of limestone. The current position is severe. About £75 million worth of property is undermined by limestone. That is the legacy of limestone mining and other works. These works have resulted in the sterilisation of land and the retardation of industrial development. The failure to provide a proper solution to the limestone problem could contribute significantly to a downward spiral in the borough's economic fortunes. Action must be taken.
The Ove-Arup report must be implemented swiftly, especially by infilling where this is necessary. I shall comment briefly on the Mineral Workings Bill, which is passing through another place. Clause 8(3)(a) gives an authority power to carry out works where there is "imminent" danger of collapse. We know that it is a moot point whether the risk of collapse in many of the workings is imminent. The wording of clause 8(3)(a) seems to be unnecessarily demanding. I can foresee mining engineers and lawyers arguing for years over whether the danger of collapse in any particular case is imminent. Some words such as "where there is the prospect of collapse" would provide an easier test to satisfy.
I propose a limestone workings compensation scheme to supplement the solutions outlined in the extensive and brilliant Ove-Arup report. Such a scheme has been put to the Department of the Environment by local authorities and it would provide a cost-effective option for the mines and zones in which the potential for collapse is low. For example, imagine the plight of a householder in my constituency who recently purchased a £50,000 house. He has paid for a search, yet he now cannot sell. He probably has no claim against the local authority, the solicitor or estate agent. His insurance may not cover that contingency, even if there is physical damage. The insurance does not cover loss of value.
The NCB has a scheme for compensation under the Coal-Mining (Subsidence) Act 1957 and there are other precedents. I believe that certain minimum requirements should be covered in a compensation scheme and that the Government must be sensible about this matter. Compensation should be payable if damage is caused to property by limestone subsidence and where the landowner is unable to obtain redress from any other source. Compensation should be on the basis of the actual cost of repair or market value at the option of the agency responsible for dealing with compensation claims. This would restore confidence in the property market and, because the risk of collape is low, the number of compensation would be small.
I should like to refer to the restoration of ancient monuments, of which there are some in Walsall. The Guildhall goes back many centuries, although the present building dates from the 1850s. I am the chairman of the Guildhall restoration committee and, on a number of occasions, I helped to keep the bulldozer away from this fine building. An excellent scheme has been put up by a local architect, Gordon Foster, and has been supported by the local authority. The scheme has now been submitted

to the Department of the Environment. I urge the Secretary of State to look favourably on this scheme, to make a quick decision and to provide financial assistance to those at the heart of the scheme. I am afraid that, if there is a delay, the Guildhall, which has been suffering the effects of erosion, may not survive another bad winter.
I do not expect the Government to change course. They will soldier on with failed policies. The Government will be protected from the consequences of those policies by the Opposition's failure so far to present their alternatives and to have those alternatives accepted. When the party's head bangers have finally been subdued and we can concentrate on presenting the real alternative to this Government's policies, the Government's days will be numbered.

The Parliamentary Under-Secretary of State for Trade and Industry (Mr. David Trippier): I am grateful to the hon. Member for Walsall, South (Mr. George) for the opportunity to debate the industrial and environmental position in Walsall. As usual, the hon. Gentleman has made his points cogently and diligently. Although I can never agree with his politics, he is a vociferous and able advocate on behalf of his constituents.
We have tonight heard a great deal about the industrial situation in Walsall, and the west midlands, together with the reasons to which the hon. Gentleman attributes the present industrial situation — a situation which must be improved, as I am the first to recognise. However, we must remember that the present position did not come about overnight. Industry in Walsall and the west midlands generally was experiencing a decline in its fortunes long before the present Government came to office in 1979. The decline was greatly accelerated by the world recession which, with hindsight, is not surprising given the region's over-dependence upon a relatively narrow industrial base concentrated on precisely those industries most vulnerable to recession.
Walsall is similar to many other parts of the west midlands in this respect and has not been sheltered from the effects of the recession. Firms — especially those which had for so long experienced overmanning—could not be sheltered from the recession and have shed a considerable amount of labour during the last few years. The result is the historically high levels of unemployment in parts of the region, and Walsall has one of the highest rates in the region—17·8 per cent. in January 1985—which have rightly been of interest to the hon. Member tonight.
As time went on, it became increasingly obvious that the recession alone was not entirely responsible for that situation—although it played a considerable part. There were weaknesses in the structure of some industries of importance to the region. The motor industry is an example often quoted.
Although the Government's general economic policy has laid the foundations for a successful entrepreneurial spirit, and my Department's national schemes of assistance to industry were available throughout the country, it became clear that the worst hit parts of the country, and particularly parts of the west midlands, were at a disadvantage when competing for new industrial investment. Plainly further action was necessary to help rebuild the region's industrial base.
We have responded to that. In December 1983 we published a White Paper entitled "Regional Industrial Development" which made it clear that changes had made the assisted areas map out of date and areas with less acute problems than the west midlands no longer justified assisted area status. That was a point that was frequently being made to us by hon. Members representing west midlands constituencies including the hon. Gentleman.
As a result, and after a comprehensive review, my hon. Friend the Minister of State, Department of Industry announced to the House on 28 November 1984 the changes in the Government's regional industrial policy, including the new assisted areas map.
The biggest change in the map was that a large part of the west midlands region was included, for the first time, as an intermediate area, including the hon. Member's constituency which falls mainly in the Walsall travel-to-work area, and a small part of the Birmingham travel-to-work area. Approximately 77 per cent. of the working population of the west midlands now falls within an assisted area.
The new policy, which accompanied the new map, is designed to focus help so that it will have the greatest direct impact on employment at a lower net cost per job. It is intended to be less costly, and more cost effective. However, the increase in coverage of the map from 27 per cent. to 35 per cent. of the working population will mean an increase in selective assistance with the balance between automatic grants and selective assistance throughout the country shifting considerably towards the latter.
What does that mean for Walsall? For the first time, the Walsall and Birmingham travel-to-work areas will be eligible for regional selective assistance under section 7 of the Industrial Development Act 1982. This takes the form of, first, a project grant which is available for projects in the manufacturing and service sectors.
Secondly, under the in plant training scheme grants may be made to cover up to 80 per cent. of eligible training costs. Thirdly, there is the exchange risk guarantee scheme which covers firms against the exchange risk on foreign currency loans in return for a service charge. Fourthly, there are loans from Europe. Fixed interest loans from the European Investment Bank of up to 50 per cent. of fixed project costs are available. Similar loans are available from the European Coal and Steel Community for projects which create employment opportunities for redundant coal and steel workers.
In addition, the hon. Gentleman's constituency will qualify for support from the European Regional Development Fund. That will give his local authority access to the ERDF for its infrastructure projects for the first time. Although I appreciate that under the temporary arrangement agreed with the European Commission, Walsall metropolitan district has been eligible since January 1984 for ERDF aid for infrastructure projects by virtue of its Inner Urban Areas Act 1978 designation, intermediate area status will ensure that that eligibility continues. Only last week the European Commission announced a further batch of projects in the region which have been allocated ERDF funding. Those include £52,000 for two projects submitted by Walsall metropolitan district council, and a further £1·8 million for

the black country route which will help to open up that part of the region for industrial investment and which is warmly welcomed in the hon. Member's constituency.
Clearly the west midlands' industrial structure and that of Walsall is such that large numbers of companies will now be in a position to benefit from assistance. The amount of aid coming to the region will, however, depend upon the response of the business sector, since regional aid is demand led. The west midlands assisted areas represent 20 per cent. of the total map coverage, and it is important to the region that it receives a fair share of the assistance available.
Initial response has been favourable. Since last November's announcement, the Department's west midlands regional office has received over 3,500 inquiries about regional selective assistance. These have, so far, generated 135 applications that are being examined by the Department's officials. Of those active cases, nine are in the Walsall travel-to-work area.

Mr. David Winnick: Is the hon. Gentleman saying anything that will give hope to the unemployed in my hon. Friend's constituency and my own constituency? Can he say that the misery of mass unemployment in the west midlands and the black country will come to an end in the lifetime of the present Parliament?

Mr. Trippier: The hon. Gentleman should not be so negative. He is directing his question at someone who represents a constituency not dissimilar to his own or that of his hon. Friend. Only two and a half years ago, the unemployment level in my own constituency was far higher than the level in the hon. Gentleman's constituency, to which I have referred. As a result of concentration on small firms and the assistance given by the Government to that area, we have reduced unemployment by a third. That is not hypothesis. It is a fact.
Intermediate area status is not alone in working to regenerate Walsall's industrial base. The designation of intermediate area status was in recognition of the area's need for greater employment opportunities. As I have already mentioned, this is in addition to the Government's general economic policies which are of paramount importance. The stress on stable prices, a low rate of inflation and a favourable climate for enterprise are prerequisites for a modern industrial economy. There are also specific policies operated both by my Department and other Government Departments. For example, under section 8 of the Industrial Development Act 1982, firms in the old Walsall travel-to-work area have received 97 offers of assistance totalling over £2·5 million for projects involving costs of £11·6 million since May 1979.
There is also the small firms sector, which has greatly benefited from our measures in this field. The small firms service, for which I am responsible, continues to offer its services to small businesses in the region. Inquiries have been averaging over 660 a week for the last month compared with just over 600 this time last year.
With regard to other Departments' policies, in 1983 Walsall was made a designated district under the Inner Urban Areas Act and has received urban programme allocations of £461,000 in 1983–84 and £550,000 in 1984–85 — with a further £550,000 allocated for 1985–86.
Walsall has also benefited over the years to the tune of £1 million from the traditional urban programme, the fund open to all authorities seeking grant aid to support social schemes in urban areas of special social need other than in those areas designated under the urban programme as partnership or programme authorities. This represents one of the highest levels of support in the country under the traditional urban programme.
My right hon. Friend the Secretary of State for the Environment is advised by a panel of experts on appropriate remedies and resources to tackle the legacy of limestone mining in the black country. Under the guidance of this panel a programme of remedial actions has started, including considerable activity in the Walsall area. The Department of the Environment and the local authorities funded a major report from consulting engineers, and so far about £1 million of derelict land grant has been spent assessing the Walsall problem in more detail. Major remedial action in Walsall is planned to start in January 1986 with infilling of the Littleton street mine near the town centre. My right hon. Friend hopes to announce shortly the 1985–86 allocation under the derelict land grant for remedial works to limestone caverns in the black country generally including Walsall.
The hon. Gentleman also referred to Walsall guildhall. I understand that applications for listed building consent and urban development grant for the restoration of the guildhall complex have recently been submitted to my right hon. Friend the Secretary of State for the Environment for his consideration. In the circumstances, it would be inappropriate for me to comment about the applications at this stage.
The hon. Gentleman also asked me to respond on matters relating to housing, although it is the responsibility of other Departments. In recent years, Walsall borough council has given priority to the modernisation and repair of the substantial numbers of council houses in its ownership. It has also launched a major initiative to renovate pre-1919 houses in the private sector through the

development of what has come to be known as the block repair scheme. These priorities have been very much in accord with national housing policy, which is for the private sector to assume a greater role in the provision of new housing.
The hon. Member mentioned the level of housing investment programme allocation to Walsall. The indications show that Walsall has had its fair share of housing resources available to the west midlands region recently. For 1985–86 Walsall has received £9·636 million, which represents some 91 per cent. of last year's allocation. Walsall has done markedly better than almost all other authorities in the region as most others received only 82 per cent. of last year's allocation. Housing investment allocations have to be seen in the context of the overall need to contain public expenditure. Within this constraint, the extent of housing need in Walsall has been fully recognised in the level of recent capital allocations.
The hon. Gentleman correctly highlighted industrial circumstances in Walsall, but his approach, like that of many in the Labour party, was rather negative. We can all recognise the problems, but some of us can see the steps that have been taken to overcome them. Following the granting of intermediate area status to the industrial heart of the west midlands, the Government have demonstrated their positive commitment to help the regeneration of the region's economy. Intermediate area status will bring many opportunities for those in Walsall to respond positively to take full advantage of what this status offers. I am glad to say that the signs of this are already apparent. Long has been the plea from the west midlands for the opportunity to compete on equal terms with other parts of the country. The opportunity is now to hand and we are looking to see the west midlands generally, and Walsall in particular, strong and vigorous once again.

Question put and agreed to.

Adjourned accordingly at thirteen minutes to Four o'clock am.